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Buying the Dip in Ford Stock: Here's What Bulls Need to See Now

Ford updates its second-quarter guidance but bulls aren't buying the good news quite yet. Here's what they need to see now.

Shares of Ford  (F) - Get Report popped on the open but haven’t been able to hold gains so far on Thursday.

Following the company’s update on guidance, the stock ran higher by 2.5% in the opening minutes of trading.

While tech is trading well on the day, the rest of the market is mixed after the Federal Reserve announcement on Wednesday. That doesn’t seem to be helping Ford stock.

That's despite the company saying its second-quarter earnings will be “significantly better” than last year’s same period results.

However, the company is still persisting through a semiconductor shortage. Management also said net income will be lower year over year, but that’s due to the company’s substantial gain in its Argo AI unit.

Surprisingly, the stock isn’t reacting with much enthusiasm (despite solid premarket gains).

The chart setup is pretty good, while Tesla  (TSLA) - Get Report, NIO  (NIO) - Get Report and others have been trading better as well. Is the dip an opportunity?

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Trading Ford

Daily chart of Ford stock.

Daily chart of Ford stock.

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From mid-May, Ford stock went on a strong rally, climbing from around $11.50 to more than $16 in a relatively short period of time.

That rally resulted in a reasonable pullback, as shares dipped down to the 10-day moving average.

Rather than an immediate bounce though, Ford stock has chopped around the $15 area, making it tough for traders to pick a short-term direction.

We’ve had several false rotations in both directions. A lower price isn’t necessarily bad, but the lack of commitment in either direction is making the stock a tough one to trade.

For instance, Ford stock initially gave bulls a daily-up rotation on Thursday, moving over $15.29. However, the move didn’t stick and shares are reversing lower from that level.

On the upside, I want to see Ford hold the $15 level and the 10-day moving. If it can clear this week’s high at $15.40, perhaps we can look for a push up to $16 and the 52-week high up at $16.45.

On the downside, the $14.80 to $14.90 area has been support, with this week’s low sitting down at $14.76. A break of this level likely puts the 21-day moving average in play.

If the selling pressure continues, the stock could fill its gap near $14 and perhaps even test down into $13.50, a key breakout earlier today and a notable high from several years ago. 

Here's the bottom line: Watch $15 on the upside and $14.76 on the downside.