U.S. auto bulls are hoping that the late Feb strength exhibited by GM’s monthly sales release this morning will carry over into March. That would stop the streak of consecutive year-over-year monthly declines in auto sales from the big two U.S. automakers. While GM’s Feb sales data at down 1% vs an estimate of down 7.7% was far better than expected, Ford continues to struggle with Feb sales down 6.1% vs the estimate of down 5.1%.
Despite Ford’s poor relative performance last month in sales, the stock has fared better year to date (down 2%) than its largest peer GM (down 11.6%).
From a technical standpoint, Ford’s one year chart looks to be rolling over with a declining 50 day moving average (purple below), sitting just above key near term support at $15. Below $15, the next real support is down about 6% at $14.25 (blue), and a break below that would see F trading near 1 year lows:
On the upside, the stock is likely to see considerable resistance at $16, the level it broke-down through on its December Q4 pre-announcement. At the moment, the upside / downside risk / reward seems pretty fair with $14 looking like very strong support and $16 serving as decent resistance.
Looking at the 30 day at-the-money implied volatility, the options remain relatively cheap for those interested in making directional plays, despite the recent bounce off of 2 year lows:
While we think that the stock could remain range-bound btwn $14 and $16 in the near future, the options market does not currently offer a decent opportunity to add overlays for longs to add yield, since options are quite cheap on a historical basis on in terms of outright yield.