The turn of the new year is bringing good fortune to Ford Motor Company (NYSE:F). Shares of the Dearborn-based automaker are up 8.5% in the first two days of 2017 alone. The rousing rally has come on heavy volume to boot. And that means this isn’t some small-fry-driven dash into Ford stock. This is an institution-led shift into the industry on the heels of solid truck sales.
With December’s solid showing, Ford scored its best year for U.S. sales since 2007. F stock has been making strides in recent weeks following lackluster 2016 performance. Compared to the S&P 500‘s 9.5% gain, Ford’s 13.9% drop was disappointing, to say the least.
But Ford lovers should take heart. The technicals are improving, and speculators are circling. On the weekly front, the stock has found significant support at the $11 level. No less than three bear raids have suffered defeat at this line in the sand.
What’s more, the recent ramp has carried Ford stock to a two-year trendline which appears poised to fail. A vault above that will signal to spectators far and wide that bear’s regime has officially ended.
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Turning to the daily chart reveals a pair of positive developments:
- First, Ford stock’s budding ascent has turned the 20-day and 50-day moving averages higher. Consider that confirmation that buyers have wrested control of the short-term and intermediate-term trends.
- Second, today’s delightful pop carried F back above the 200-day moving average.
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The tanker of a smoothing mechanism will need some further backing and filling before turning higher. But this is a good start.
Back up the Truck in Ford Stock
Traders leery of chasing Ford shares here should consider selling naked puts instead. The naked put allows you to get paid for your willingness to buy shares at a lower price.
For example, right now you can sell the Feb $13 put for 50 cents. If the stock sits above $13 at expiration, the put will expire worthless allowing you to pocket the 50 cents. On the flipside, if Ford falls below $13 by expiration, you will be obligated to buy 100 shares at an effective purchase price of $12.50.
For bulls expecting higher prices in the months to come, this sets up a potential win-win.
As of this writing, Tyler Craig did not hold a position in any of the aforementioned securities.
