PreMarket Prep Stock Of The Day: Ford Motor Company

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

When a company makes an announcement that has a positive impact on its share price, investors — primarily short-term ones — need to determine whether it is a buying, selling or shorting opportunity.

Of course, there are several different ways to interpret the Ford price action, but the combination of utilizing technical analysis along with the interpretation of the news can be fairly reliable.

After the close Monday, Ford Motor Company F announced it is making a major push toward electric vehicles with an $11-billion investment in battery technology and the construction of four factories: The corresponding price action makes it the PreMarket Prep Stock of the Day. 

Is It That Big Of A Surprise? It is really that big of a surprise that Ford, being one of the largest auto manufacturers in the world for over a century, would eventually make its way into the electronic vehicle market? No.

The automaker has already made several announcements regarding entering the EV market. Along these lines, it has already started making an electric version of its best-selling product, the F-150 truck, which will be available for purchase in spring 2022.

Perhaps the more compelling news is that the company Ford expects 40% to 50% of its global vehicle volume to be fully electric by 2030.

Ford's Price Action Prior To Announcement: When analyzing the price action from a news item, it is important to have a perspective on the recent price action. The reason being: it will help gauge short-term investor sentiment toward the issue.

In the case of Ford, it has caught a major bid along with the entire EV sector over the last four sessions. Since bottoming on Sept. 20 at $12.63, the issue had gravitated to $14.16 to end Monday’s session.

Considering the issue is usually a slow-moving one, the 12% move off that low in such a short time frame is very unusual, and many investors may want to “ring the register” on the quick windfall off the news.

PreMarket Prep's Take On Ford: When the issue was being covered on the show Tuesday, it was trading at the $14.70 level, an area it has not seen since July 29, when it peaked at $14.79.

It should be noted that price was a major top for the issue and set the stage for the move down to $12.30 Aug. 20. 

Co-host Dennis Dick said he was not surprised by the announcement at all but was surprised by the investor reaction to it. "The NYSE open book is littered with huge sell orders, and it is going to take some aggressive buyers to keep it at this level," he said. 

The author of this article encouraged investors who had a target in the $14.75-$15 area to consider taking advantage of the opportunity off the open.

The full discussion on the issue from Tuesday’s show can be found here:

F Price Action: Ater a much higher open ($14.63 vs. $14.19), Ford rallied another dime to $14.73 and reversed course Tuesday. The ensuing decline found support between Monday’s close ($14.16) and the top of Monday’s range ($14.29) at $14.23. 

The stock ultimately closed at $14.32 Tuesday and is trading slightly higher at $14.33 late Wednesday morning.