Shopping for a new Fiat with their stock

• Posted by Greg Harmon
• on August 6th, 2015

I think I may have just found the perfect new ride for me. This Fiat 500l could be the perfect car for my little 10 mile jaunts around town, often with a couple of kids. Cute, small, easy to park. What is not to like? And I think I found an easy way to pay for it too. Use the company stock.

The chart below shows the stock price since October last year. It had a run higher into early December before a pullback. And then another run higher to a peak in March. From there it has built an expanding wedge. The top of the wedge at 16.35 is being tested again this week.

It has support for a push higher from the momentum indicators. The RSI is bullish and the MACD is rising. And the Bollinger Bands® are shifting to the upside. The bull flag that is building would give a target to 18.35 on a break to the upside. That would mean buying just 10,000 shares to make the $20,000 MSRP.

But what if it does not break to the upside? What if it falls back instead, failing to break higher? Well that might make it even less capital intensive to buy one. A retrace down to the 200 day SMA at 14 would be first support, but if it were to make it to the bottom of the wedge at 13 then you would only need to short about 6,000 shares.

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