Ford Motor Company (F) shares have moved higher by more than 5% over the past five trading sessions thanks to strong automotive sales and positive developments for self-driving vehicles. Hurricane Harvey had an adverse impact on deliveries during the last week of August, but the industry’s fundamentals remain supportive of strong vehicle sales growth. Ford’s F-Series has been especially strong over the past month, with strong pricing.
The House of Representatives also passed a bill that would create a framework for the autonomous car industry. The so-called Self-Drive Act clears the way for automakers and tech companies to test up to 100,000 autonomous vehicles each year without worrying about state regulations on design. The Senate will take up the bill in the fall of this year, but a bill discussing self-driving trucks will come even sooner in mid-September. (See also: Self-Driving Vehicles Will Create ‘Passenger Economy’ Worth $7 Trillion: Study.)
From a technical standpoint, Ford stock rallied from reaction lows made back in May to the 200-day moving average at $11.48. The relative strength index (RSI) moved to overbought levels at 70.31, but the moving average convergence divergence (MACD) experienced a bullish crossover that could signal more upside ahead. Traders should maintain a bullish bias on the stock but keep an eye out for near-term consolidation given the lofty RSI reading.
Traders should watch for a breakout from the 200-day moving average to retest prior reaction highs at around $11.80 or a move lower off of the resistance levels to the 50-day moving average at around $11.08. A breakout from upper trendline resistance at $11.80 could set the stage for a rally to retest highs made earlier this year, but some consolidation is likely before the next significant breakout given the recent run-up in price. (For more, see: Top 5 Companies Owned by Ford.)
Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.