It has been a tough three months for most auto stocks with the Global Auto ETF (CARZ) falling around 1.22%. In contrast, the S&P 500 SPDR (SPY) is up 4.21% since March 11th. Within the group, Ford (F) Daimler-Chrysler (DDAIF) and Toyota (TM) show gains during this period, while the other six show losses. Note that Tesla is by far the biggest loser with a 25% decline.
Ford is the clear performance leader and the price chart also looks bullish. First and foremost, the long-term evidence points to an uptrend here. The stock broke above its September-December highs with a surge in April. Ford is also above its 200-day SMA and this moving average is starting to turn up. And finally, notice that the 50-day SMA is above the 200-day SMA.
Short-term, the stock fell back to the breakout zone and filled the late April gap with a decline in May. While the filled gap may seem negative, it is normal to return to the breakout zone and the stock was entitled to a correction after the April surge, which was 28%.
The stock is starting to bounce. Broken resistance turned into support in the 9.5 area as the stock forged a gap-gap reversal last week (green oval). Notice that Ford dipped below the 50-day SMA with the gap and then reversed with a gap-move back above the 50-day. This reversal affirms support in the 9.5 area and a close below 9.5 would call for a re-evaluation.
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Arthur Hill, CMT
Senior Technical Analyst, StockCharts.com
Author, Define the Trend and Trade the Trend
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