Ford Motor Co.’s (F) shares tumbled 8.16% yesterday from $13.84 a share to $12.71 after reporting second quarter earnings. Adjusted earnings per share came in at $0.52, well below the analyst’s survey of $0.60. Net sales came in at $36.9 billion, a slight beat of the analysts’ expectation of $36.6 billion. The auto-maker cautioned of risks challenging the 2016 guidance for pre-tax profit, automotive operating margin and EPS equal to or higher than 2015.
The company also announced plans to invest $4.5B by 2020 in electrified solutions; Ford number two in the U.S. in electrified vehicle sales for 2015.
Price action on the F daily chart shows that following today’s earnings report, price has now fallen back below all three key (200-, 100- and 50-day) SMA(s). Price is tentatively finding support from $12.44, which is the 78.6% Fibonacci retracement of the $12 to $14 rally. If we see this level break, major support will come from the $10.44 level. If we see price stabilize here, initial resistance will come from the 200-day SMA, which trades at the $13.38 level.The Trade: Buy F at $10.50, with a stop loss at $9.50 and a take profit at $14.50. The Risk/Reward Ratio is 1:4