Trading Strategies For Ford Stock Before And After Q3 Earnings

Ford Motor Company F is set to print its third-quarter financial results after the market close Thursday. The stock was falling slightly heading into the event.

When the legacy-turning-electric vehicle manufacturer printed its second-quarter results on July 27, the stock closed down 3.42% the following day, continuing to fall within a downtrend.

For the second quarter, the company printed earnings per share of 72 cents, which beat the consensus estimate of 55 cents. Ford also beat on the top line, reporting revenues of $45 billion compared to the $40.38-billion estimate.

For the third quarter, analysts expect Ford to report EPS of 45 cents on revenues of $41.22 billion.

On Oct. 6, Morgan Stanley analyst Adam Jonas reiterated an Overweight rating on Ford and maintained a $16 price target.

From a technical analysis standpoint, Ford’s stock looks headed lower following the earnings print, trading in a fairly consistent downtrend and working to print a bearish Marubozu candlestick.

It should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat.

Options traders, particularly those who are holding close-dated calls or puts, take on the extra risk because the institutions writing the options increase premiums to account for implied volatility.

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The Ford Chart: Although Ford temporarily negated its downtrend on Thursday, when the stock gapped up to print a higher high, the overall downtrend that began on Sept. 13 may still be dominant. The most recent lower high was formed on Oct. 20 at $11.76 and the most recent lower low was printed at the $11.21 mark on Wednesday.

• On Thursday, Ford attempted to regain the 21-day exponential moving average (EMA) as support but failed, and the stock subsequently ran into a group of sellers who knocked it back under the eight-day EMA. The eight-day EMA is also trending below the 21-day, which is bearish.
• If Ford receives a bullish reaction to its earnings print and Thursday’s low-of-day marks a higher low, a new uptrend will be confirmed. If the stock suffers a bearish reaction to earnings, Thursday’s higher high will serve as a bear trap and downward pressure is likely to accelerate.
• Ford has resistance above at $11.58 and at $11.59 and support below at $11.17 and at $11.