The timing on a Ford Mustang 5.0 is computer controlled. The timing starts with the hall-effect sensor in the distributor, where the signal is picked up relative to the position of top dead center on the number 1 cylinder. The distributor contains both a vacuum advance and a mechanical advance. The vacuum advance allows for easier starts by allowing the timing to regress to a retarded state just for starting. As soon as the engine starts and a vacuum is produced, it advances the spark for the correct idle. The manual advance increases the advance above 2,000 rpm.
Connect the timing light to the battery by placing the red lead to the positive terminal and the black lead to the negative terminal. Make sure the wires are free of all moving or hot parts. Connect the inductive carbon pickup around the number 1 spark plug wire. This is the closest wire to the radiator on the passenger's side of the engine in a Mustang.
Disconnect the spout connector, which is a white, plastic, square-looking in-line plug that is close to the ignition module. This will take the computer out of the line and allow the timing to drop to its lowest uncontrolled limit (base timing). Disconnect the vacuum hose from the distributor and plug it with a screw. Start the engine and allow it to warm up.
Shine the timing light on the timing plate, which is located on the timing chain cover. The timing plate has a V groove in the center of the plate, which is top dead center (0 degrees). The advance numbers are from the 0 mark upwards, toward the water pump (before top dead center). The lower numbers running down toward the oil pan are degrees of retard.
Check the numbers on the timing plate. They should indicate that the timing is 14 degrees below top dead center (BTDC) on the timing plate. If the numbers are off, the distributor needs to be adjusted.
Shut the engine down. Loosen the distributor with the distributor wrench just enough so that the distributor can be rotated. Start the engine and shine the timing light at the timing plate. Rotate the distributor clockwise to advance the spark timing, and counter-clockwise to retard it. Set the timing on 14 degrees BTDC by rotating the distributor, then tighten the distributor.
Reinsert the spout into its respective receptacle. Connect the vacuum line to the distributor.
