- Ford (F) shares have been on a strong surge so far in 2021.
- Ford has had a number of catalysts with new electric vehicle launches.
- Ford shares upgraded by RBC on Thursday.
Ford shares have driven on to new five-year highs on Wednesday as the automaker switches to the electric vehicle space to charge up its shares. Note to the author: that is enough puns for now. A gain of 8.5% though for Wednesday is not too shabby. Ford shares have been boosted by increased investor enthusiasm over its shift into the electric vehicle space. Ford recently announced the F-150 electric pick-up and has launched the all-electric Mustang. Ford held an investor day on Wednesday, which obviously went down well given the spike in the share price. During Wednesday’s presentation, Ford outlined plans to increase its pivot to electric vehicles with increased spending and stated that it is targeting to have 40% of all its vehicle sales globally be electric by 2030. The plan presented by the company is called Ford+ and envisages increased spending on electrification from $22 billion to $30 billion. Most particularly liked by investors was Ford’s expectation of hitting an 8% operating margin by 2023. Ford also confirmed during Wednesday’s investor presentation that it plans to have two separate electric platforms, one for trucks and SUVs and the other for small crossovers and sedans.
While the moves on Wednesday were impressive and investors backed the plan, it should be noted that investor presentations always or nearly always err on the side of optimism. Previous Ford investor presentations have promised to raise margins but failed to deliver. Wall Street analysts clearly liked what they heard though, with many upgrading their forecasts on Thursday. Deutsche Bank, Benchmark, Wells Fargo, CFRA and RBC have all raised their price target on Thursday.
The monthly chart below gives us a longer-term view of how Ford (F) shares have been performing and shows the strong downtrend breakout that occurred just before Christmas.
The daily chart shows more clearly just how incessant the trend has been since the pandemic lows with the recent strong support area of $11-12 providing the base for the strong surge. This has also nicely confluenced with the 100-day moving average. The current bullish trend is held in place by the 9-day moving average at $12.79 and the support at $12.59, the post earnings report high. Breaking $12.59 would create a lower low and end the new uptrend, so it is important to hold. The one worry for bulls is the combination of both Relative Strength Index (RSI) and Commodity Channel Index (CCI) both just flagging overbought conditions. This is not surprising given the surge in F shares on Wednesday. Consolidation can see prices remain at current levels and momentum indicators such as RSI and CCI retreat to neutral levels. This signifies that overbought or oversold indicators do not have to lead to price reversals. But it does make it less likely for a trend continuation in the short term.
| Support | 11.85-11.24 highlighted | 11.72 100-day MA | 9.90 trendline | 9.78 200-day MA | 8.45 |
| Resistance | 18 | 21.60 |
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