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Ford Motor Beat On Earnings But The Stock Failed At A Key Level. Here’s How To Trade It Now.

Ford
F
reported a second-quarter profit, but revenue missed expectation because of shortage of semiconductor chips. Even with cuts in production, Ford raised its full-year earnings guidance. The stock rebounded on July 29 but failed at its weekly pivot at $14.72. It ended this day below its 50-day simple moving average.

Ford had a golden cross buy signal on its daily chart back on September 22, 2020, when the stock closed at $6.78. The stock also had a breakout above its 200-week simple moving average or reversion to the mean at $9.41 during the week of January 15, 2021. These were major buying opportunities.

The Daily Chart for Ford Motor

Look at the lower left-hand corner for Ford’s daily chart. Note the golden cross buy signal from $6.78 on September 22, 2020. This occurred when the 50-day simple moving average rose above the 200-day simple moving average.

In this formation buying weakness to the 50-day SMA provided buying opportunities. On January 4, 2021, the 50-day was tested at $8.67. Another buy signal occurred when the 50-day was tested at $11.71 on March 25, 2021. This buy signal gained momentum on May 20 with the price gap above the 50-day SMA. This provided the rise to the 52-week high of $16.45 set on June 4.

The rebound from the July 19 low at $12.79 was in anticipation of a positive reaction to earnings. Last week’s rebound to $14.79 on July 29 was a test of the weekly pivot at $14.72 where profits could be taken. The downside is a return to the 200-day SMA now at $11.58. Below are annual, quarterly and semiannual value levels at $10.17, $9.06 and $7.62, respectively.

The Weekly Chart for Ford Motor

The weekly chart for Ford Motor is negative with the stock below its five-week modified moving average at $14.03. It’s well above its 200-week simple moving average or reversion to the mean at $9.68. The 12x3x3 weekly slow stochastic reading is declining at 55.02.

Trading Strategy: Buy Ford Motor on weakness to its 200-day SMA at $11.58 and add to positions at its annual, quarter and semiannual value levels at $10.17, $9.06 and $7.62, respectively. Reduce holdings on strength to the weekly pivot at $14.72 and the monthly risky level at $16.30.

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