Ford Stock Now in Buy Zone After Clearing Short Consolidation

Key Points

• Ford cleared short-term resistance near $13, presenting a potential early entry point for investors.
• Fellow big automakers GM and Stellantis have also seen big upside moves after regulators eased proposed EV production mandates.
• Both GM and Ford are outperforming the S&P Consumer Discretionary sector. 

Ford Motor Co. NYSE: F stock was up nearly 7% for the week as of mid-session on March 22. 

The move followed news that the federal government acknowledged reality regarding electric vehicle sales. The government backed down on previously proposed Rules that automakers reduce production of internal combustion engine vehicles or face hefty penalties.

A look at the Ford Motor chart shows the stock forming a cup-shaped base below resistance at $15.42.

The stock overcame short-term resistance near $13; for investors seeking an early entry point, the stock is currently in a buy zone.

Ford Cruising Above 50-Day Average

Ford stock is currently trading 6.8% above its 50–day moving average. While that's an indicator of fast price movement in a short period of time, it does not signal, in this case, that the stock is extended. That's because there is still plenty of work to do before Ford reaches that prior high of $15.42.

Fellow big automaker General Motors NYSE: GM also rallied out of a consolidation and is actionable.

On the General Motors chart, you can see the stock clearing a buy point north of $41.80 out of a consolidation that began in February 2023.

Regulatory Shift Boosts Automotive Stocks

On the GM chart, you can also see that upside trade picked up on March 15 as rumors began to circulate about the easing of mileage requirements.

In fact, GM stock and Ford stock have both been outperforming the Consumer Discretionary Select Sector SPDR Fund NYSEARCA: XLY in the past five sessions. 

General Motors has been leading consumer discretionary stocks in the past five sessions, with Ford coming in at number five.

Analyzing Ford Motor's Recent Performance

Ford stock has been languishing since early 2022, although there have been tradable rallies since then. Earnings growth has been slowing in the past two years, and Wall Street expects earnings to decline this year and next.

You can follow that trajectory using MarketBeat’s Ford Motor earnings data. 

It wasn’t only Ford and GM that saw upticks; Stellantis N.V. NYSE: STLA, maker of Chrysler, Dodge, Jeep and Ram brands in the U.S., as well as several international brands, including Alfa Romeo, Peugeot and even Maserati, has also been trading significantly higher.

Here's what drove the upside momentum: On March 20, the Biden administration reduced its targets for EV adoption significantly. Original proposals had called for 67% EV sales by 2032, but as the auto industry and auto union members balked, the administration cut those targets to as little as 35%.

Automaker and Union Concerns

With the state of Michigan being a political battleground in a presidential election year, the administration was sensitive to union members who correctly pointed out that they would lose jobs and see lower wages if the EV rules were implemented. 

For their part, automakers pointed out that consumers haven’t exactly been rushing to buy EVs at the rate Washington had expected. High costs and unreliable charging stations are among factors dampening buyer enthusiasm. 

Hybrids Remain Popular

However, hybrid vehicles such as Toyota Motor Corp.’s NYSE: TM Prius have remained popular. Drivers currently want the ease of pulling into a traditional gas station to fuel their car, rather than worrying about finding a charger. However, the popularity of hybrids also indicates that consumers are interested in lowering their gas consumption..

The auto industry needs extra time to figure out how to preserve union jobs while simultaneously working to meet environmental standards.

The uptick in Ford, General Motors and Stellantis stocks indicates that investors are relieved about the relaxed rules.

Regulator Eases Standards

The Environmental Protection Agency’s revised standard allows automakers greater freedom to meet emissions standards with gas-electric hybrids such as the Prius. 

Its final rules give the OK to automakers to build traditional internal combustion engine vehicles through 2030 and still reach fuel economy requirements.