There has been no shortage of news flow in the two main autos this year. While GM dominated the better part of the first half of the years with recalls, Ford interestingly just sounded the alarm on disappointing results for the quarter just ended resulting from challenges overseas and losses from one of its own recalls.
The stock’s have dramatically under-performed the broad market, with Ford down almost 6% on the year and GM down 19%. While the news flow could clearly get worse from here, it is important to note that both stocks this week have come back to this year’s prior low.
Ford 1yr Chart:
GM 1yr chart:
As a sort of pre-cursor to what could be a broader period of higher volatility, it is interesting to note that in a matter of weeks, implied vol in Ford (the price of options) went from almost 52 week lows to almost 52 week highs:
Spikes in volatility near technical support sometimes mark potential entries on a contrarian basis. Of course, sometimes it means nasty breakdowns. We’ll be keeping our eye on these stocks for potential plays.