Ford stock is falling after disappointing earnings. Here’s where the potential support is.
The market on Friday is mixed, with the Nasdaq a touch higher. But Ford (F) – Get Ford Motor Company Report stock is missing out, down more than 11% after reporting earnings.
Amazon (AMZN) – Get Amazon.com, Inc. Report, Snap (SNAP) – Get Snap, Inc. Class A Report and others in tech are bursting higher on earnings and automotive bulls were hopeful that Ford’s push to EV would pave a similar path for the stock today.
Video: Ford CFO Explains How Inflation and the Supply Chain Affected Earnings
Adding to the mix was the jobs report this morning,.
Despite the Dearborn, Mich., auto giant’s optimistic outlook on its EV production, a miss on fourth-quarter earnings estimates soured the mood. Guidance was solid, but a bit short of expectations, too.
The company expects $11.5 billion to $12.5 billion in adjusted earnings before interest and taxes vs. consensus estimates of $12.2 billion. The midpoint of $12 billion isn’t that far off and would represent a 20% increase vs. 2021.
As a result, I’m looking at Ford as a dip-buying opportunity. The only trouble is figuring out where to buy this name.
Trading Ford Stock
Daily chart of Ford stock.
Chart courtesy of TrendSpider.com
With Friday’s move lower, Ford stock is giving bulls an “ABC” type correction. The question becomes, how deep will the “C” leg go?
Ahead of the open, I was hoping that Ford would find some stability around the 21-week moving average and reclaim last week’s low at $18.80. That would have given the bulls a nice bullish reversal, but that’s not panning out.
Instead, investors continue to sell Ford stock lower and that’s okay. Why? Because that has us looking at an important area.
If we get further downside, keep an eye on the $16.45 to $16.85 area. Near the high end of that range is the 161.8% downside extension of the current range.
Slightly below that is the $16.45 breakout level and the 200-day moving average. Personally, I prefer a test of this zone vs. the downside extension level, but traders should be aware of the latter.
At the current lows, Ford stock is down about 32% from the highs last month. That’s a pretty big haircut for what was a relative-strength leader until just a few weeks ago.
Obviously, waiting for a dip down to the $16.45 area will mean more losses and it may not come to that — especially if the market powers higher — but it’s a great risk/reward setup if we can get it.
On the upside, see how Ford stock handles the $18.80 to $19 area. If it goes back above this zone, perhaps it can fill the gap. But once support fails, we always run the risk of it turning into resistance.
