GM trade ideas
GM Short Overbought Stochastics on the
15, 60, daily and weekly timeframes.
Looking for a pullback to the 20 day moving average.
Short Entry 24.50 to 25.
Target 23
Note: If the futures are up Monday morning I will look for a entry into short above 25. If the futures are weak Monday morning I will enter short premarket.
GM Forecast for 10% rallyThe decline in GM shares from the peak in Feb over $27.50 to its low in July under $19 is over and the stock has found a base valuation at the $19.50-$20.00 level. I note the resistance at the $22 to $23 level and that is why I would expect to see several sharp reactions from that price level before surmounting that price.
Note the downtrend channel has been violated.
Note that volume disappeared when the stock fell to a new low.
Note the resistance zone overhead which will create supply from "break-even" sellers at that level.
Note that this can be a great trading stock for the next 5-6 weeks.
Note support in the double-blue boxes underneath the current price.
Fundamentally, GM is cheap relative to sales, earnings, cash flow, and the clear negative is weakness in Europe and the US Gov't's ownership position in GM shares.
Keep in mind that basing happened first in Crude Oil and then Oil Service stocks and now that crude oil has rallied a bit, it may put a slight headwind on the overall market for the next 3-6 months. Search for "OIH Base" here at Tradingview.
Cheers.
Tim West 1:50PM EST, August 15, 2012
