Bearish Outlook: Sell the Rally on Ford Motor Company (F) Stock
Though we don’t often analyze and rate stocks that we feel are solidly bearish, we couldn’t resist on this one. Yes, Ford Motor Company (F) is a fabled, iconic brand that has been around pretty much forever. But the automobile manufacturer has been falling on hard times for years. A quick look at any long-term chart of Ford tells the story – the stock has been in a general decline for quite a long time, and a bona fide downtrend for at least five years.
What’s been happening to Ford lately? It’s no secret that the company’s sales and revenue growth have long been suffering mightily. Ford even announced in April that it planned to stop producing many models of cars and instead focus heavily on trucks and SUVs. In fact, it’s gotten so bad that the company has made a departure altogether from the auto industry in one of its recent acquisition targets. Ford just announced that it is acquiring Spin, an electric scooter rental start-up, for more than $40 million.
Ford’s latest earnings release on October 24th was better than expected, leading to a gap-up and follow-through to the upside in subsequent trading days and weeks. However, we don’t see this move as sustainable.
From a technical perspective, the price of F stock continues to be entrenched in a strong downtrend, no matter how you look at it. While the last couple of weeks have seen the stock rally from its lows after the latest earnings, we don’t believe this will last for long. The rally has brought the stock price up to the top of a down-sloping 100-day linear regression as well as near the upper band of the Bollinger Bands. Oscillators are also flashing overbought. This rally is clearly at or near exhaustion, at which point the bearish trend is very likely to start asserting itself once again.
The Technicals Rating
The Technicals gives F a bearish rating of 3 (on a scale of 1-10, with ’10’ being the most bullish and ‘1’ being the most bearish). Below are some of the key technicals for F, as well as other relevant information that paints a moderately bearish picture of the stock:
- Price Position vs 200-Day SMA: -10.60% (below) – BEARISH
- Position vs 50-Day SMA: +1.73% (above) – BULLISH
- Position vs 20-Day SMA: +4.07% (above) – BULLISH
- 100-Day Trend Slope (Linear Regression): BEARISH
- 200-Day Trend Slope (Linear Regression): BEARISH
- Stochastics (14,3,3) Level: Overbought and Falling – BEARISH
- RSI (14) Level: In the Middle – NEUTRAL
- Position in Bollinger Bands: Near Upper Band – BEARISH
- Sector (ETF: CARZ) Long-Term 200-Day Trend: BEARISH
- Sector (ETF: CARZ) Medium-Term 100-Day Trend: BEARISH
- Market (S&P 500) Long-Term 200-Day Trend: BULLISH
- Market (S&P 500) Medium-Term 100-Day Trend: BULLISH
- Short Interest Ratio: 3.35% – BEARISH
- Mean Implied Volatility (IV): 27.50% (52-week range of 14.58%-46.19%) – BULLISH
- Analysts’ Mean Target Price: $9.89 (above current price) – BULLISH
- Last Earnings Move: Sharp Gap Up – BULLISH
Overall The Technicals Rating for F: TTTTTTTTTT (3 out of 10) – MODERATELY BEARISH
IMPORTANT: The information above should not be construed as investment advice and should not be considered as a solicitation to buy or sell securities. Past performance is not indicative of future results. Trading and investing in the financial markets involves substantial risk of loss, and may not be suitable for all investors.
Disclosure: At the time of this article’s publication, we have no position in any security or trade/investment mentioned, nor do we have any business relationship with any company whose stock may be mentioned.
Chief Market Strategist at The Technicals
With more than two decades of experience as an equity analyst for several major research firms, Don has covered individual stocks (both technically and fundamentally) across a wide variety of sectors and industries, including tech, financial, and retail. He has been quoted regularly in key financial media like Bloomberg and Reuters. Contact Don