Is Ford Stock Recharged or About to Run Out of Gas?

Shares of Ford  (F) – Get Ford Motor Company Report are rallying about 5.5% on Thursday following better-than-expected earnings. Assuming the stock finishes higher on the day, it will mark its eighth rally in the past 10 trading sessions.

Further, with the shares up 8.5% this week, Ford stock is going for its fourth straight weekly gain. Given the volatility in the market, that may surprise some investors.

This morning, the automaker crushed earnings expectations, maintained its full-year outlook and raised its dividend. What more could investors ask for?

This came after General Motors  (GM) – Get General Motors Company Report missed on earnings expectations and provided a muted outlook earlier this week.

On the charts Ford stock has cleared a major resistance hurdle — the 10-week moving average. This measure has been active resistance since January, so to clear it is significant.

But the stock is now running into another layer of support. That’s the problem with stocks entrenched in downtrends; they have multiple overhead hurdles to fight through.

Trading Ford Stock on Earnings

Weekly chart of Ford stock.

Chart courtesy of TrendSpider.com

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As you can see on the weekly chart above, the 10-week moving average has been stout resistance.

I really like the way Ford shares are trading right now. Not only did Ford stock push through the 10-week, but the move came after it found its footing at a significant support area: $10 and the 200-week moving average.

As the market was plunging to new lows, Ford was finding its footing in this area. Now that the shares are up significantly from the lows, they’re running into the declining 21-week moving average and 23.6% retracement.

Neither measure is as significant as some of the other measures, in my experience. The 21-week is not as critical to me as the short-term, active trend (via the 10-week) or the long-term trend (via the 50-week). Nor is the 23.6% retracement as key to me as the 50% or 61.8% retracement.

That, however, does not render the 21-week moving average and the 23.6% retracement irrelevant.

If Ford stock can power through these measures, it could open the door to the $16 to $17 area, where we find the 50-week moving average and the weekly VWAP measure.

If the stock cannot push through current resistance, the bulls will need to see support come into play near $12.50 and the 10-week moving average. Losing both measures could put a retest of the lows near $10.50 to $11 in play.

A longer term rally could set the stage for a test of the $18 to $18.50 zone, which is the 50% retracement and was notable resistance in the first quarter. 

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