Time For Ford To Play Catch-Up With General Motors?

For auto traders, the third quarter was all about General Motors Company GM. GM stock surged from $34.24 at the beginning of August to a new all-time high of $46.76 in mid-October. While GM stock jumped 30 percent, Ford Motor Company F lagged behind, gaining just around 10 percent in that time.

In the past five trading sessions, however, the stocks have converged, with GM dropping 5.2 percent and Ford gaining 2.7 percent.

GM took a battering from Goldman Sachs last week in a downgrade note suggesting the stock has significant downside ahead. Ford got its own downgrade from Morgan Stanley Tuesday, but the stock traded higher on the day, suggesting pessimism may be already priced into Ford's stock.

Ford rallied Wednesday on reports of strong October auto sales in the wake of Hurricane Harvey.

For the second day in a row, Ford traders shrugged off the bad news, while GM stock sank. The strong relative sales performance may have been just the catalyst the stock needed in the short term.

From a technical standpoint, GM stock still looks strong despite its recent pull-back. It has now completely closed a gap from early October and reset what had become an extremely overbought RSI level. GM has already bounced off of its Wednesday lows after the gap fill and could soon be headed higher once again. If it closes below $42, the stock could find support at the 50-day simple moving average at around $41.

For Ford, the stock is now testing $12.56. A breakout above that level would likely lead to a test of the $13 range. If Ford can’t break through $12.56, it could be headed back down to its July high and October low of around $11.60 before it finds support.

Joel Elconin contributed to this story.

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