Ford, GM Stocks Are Getting Ready For Their Next Move
Stocks in the automotive sector have turned hot as legacy automakers have begun a shift to electric and autonomous vehicles. A global chip shortage, however, has left some traders and investors wary of how vehicle makers will be impacted.
Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) have pulled back from recent highs and are hanging out near support lines. Both stocks could be digesting their new highs in a phase of consolidation before making a further push north.
With upcoming earnings — Ford reports first-quarter 2021 earnings after the close on April 28 and GM reports May 6 before the open — the market may wait to make a decision based on the numbers.
The Ford Chart: Ford hit a new three-year high of $13.62 on March 15 and has since retraced 10%. Ford’s stock may have completed a bearish head-and-shoulder pattern on the daily chart, but hasn't had follow through on the pattern.
On Tuesday, Ford’s stock tested and wicked off its lower support at $12.17. If the chart reacts to the head-and-shoulder pattern within the next few trading days, it will lose that support and could retrace back to the $11.30 mark.
On Friday Ford’s stock crossed below the eight-day exponential moving average (EMA) and the 21-day EMA which is bearish.
Bulls want to see the head-and-shoulder pattern negated and the stock to hold $12.17. It could then consolidate sideways until earnings or another catalyst. The declining bear volume on the daily chart is bullish and makes it more likely the stock will not fall further south.
Bears want to see follow through on the head-and-shoulder pattern and for Ford’s stock to drop below its support.
The GM Chart: GM reached an all-time high of $63.44 on April 6 and has since lost 8%. GM's stock is pinned between the eight-day EMA and the 21-day EMA and looks to be trading sideways in a healthy consolidation pattern. GM’s stock has support below at $56.88 and could trade within the $56 to $63 range until earnings or a news catalyst.
Bulls want to see continued consolidation to power another move up to test all-time highs. Like Ford, GM has declining bear volume on the daily chart which makes the chances of GM losing support less likely.
Bears want to see GM's stock test and lose support which could see the stock fall to its next support level at $54.25.
F and GM Price Action: Shares of Ford were trading down 2.2% at $12.12 at publication time, while GM was down 2.3% at $58.28.
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