DISCLAIMER: This is the first DD I’ve ever attempted so take everything here with a grain of salt. I’m just trying to get better and contribute to the community so any and all feedback is greatly appreciated.
UPDATE 10/23: F closed above $6.50 on Thursday like I was looking for, but dipped Friday to close around $6.28. I’m still holding shares/calls into Monday. It’s still well above the 20 MA on the daily which indicates a continued uptrend, and the RSI has cooled off a little without becoming divergent (which is kind of a mixed signal —indicating slowing momentum but also that F is less overbought).
I’ve just been hacking away at this on breaks at work so I apologize if it’s not as coherent as it could be.
Here’s the 1d chart for F for the current YTD.
F has been on an upswing since the end of September. It had been trading in a downward channel off the previous 52-week high of 16.46 which it reached in early June.
Looking at the 1d chart it seems to be repeating an earlier pattern where it broke out of a similar downard channel in May. The “top” of that previous channel corresponds roughly with the support that F bounced off in September, which started this current bull run.
In the past couple days F seems to be establishing supports/resistances that seem, to me, bullish. F had a big green day (+4%) on 10/20 due partly to news that Credit Suisse upgraded its price target to $20. It reached an intraday high of $16.16 and then consolidated around $16 for the rest of the day. It retested that intraday high in after hours, trading around $16.12, and then broke it in pre-market on 10/21. The stock opened at $16.17 on 10/21 and then ran up to set a new 52-week high of $16.70. Currently it’s consolidating around $16.50, so the old 52-week high now seems to be becoming support.
I’m used to seeing F sell off heavily after big days, but so far it hasn’t which might indicate there’s more gas in the tank on this run. This repetition of a previous breakout cycle also happens to correspond with an earnings report on 10/27 and monthly options expiry on 10/29.
When F pushed above $16 earlier this week it put 70k 10/22 16C and 45k 10/29 16C in the money. A close above $16.50 Thursday 10/21 would put a further 33k $16.50C’s in the money. I only mention this to say that delta-hedging could create some support, if not upward pressure.
Just to clarify: I don’t see this as an earnings play and plan to exit most of my position before earnings are announced. The earnings target for Ford this quarter seems pretty high and even though Broncos are flying out of the lots, supply chains are still hugely fucked everywhere and the chip shortage continues.
Some downsides:
- RSI is currently high, around 75.5
- There’s no law that says the current breakout cycle has to be proportionate to the last one. I’m expecting F to eclipse it’s previous 52-week high by a more significant margin than it already has, but I’m just drawing lines.
Currently I’m looking for F to do a few things:
- Continue consolidating around $16.50-$16.60 range (somewhere at or above the previous 52-week high of $16.46).
- A close above $16.50 on Thursday and/or Friday 10/22 would be bullish.
- Break resistance at $16.65 and then $16.70 as earnings approach (10/27).
- A break of $17.13 followed by $17.21.
I’m just playing shares. My first TP will be around that $17.13 resistance, and then I’ll use a trailing stop if it breaks and runs from there.
Thanks for reading!