Anticipating a bottom on TM

Feb 21st, 2010 – Comment

When I look at a chart like this I have to admit that they are not my favorite. The stock isn’t going up, its trading below its 50 and 200 day moving averages and the uptrend is broken.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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Toyota

 

Hi Lou,

I have kept track of you since your days in television. You are doing great.
Once Toyota fixes the  problems would it be a buying opportunity?
Thank you,

Mike.
Medicine Hat, AB.

 

 

Hi Mike,

Thanks for your support over the many years! I have had the opportunity to visit Medicine Hat and have to say its one sweet town. Your question regarding Toyota Motor Corp ( TM NYSE) is a good one and I have been watching the chart to see if a bottom is forming.

tm2

The three year chart provides a view of the breakdown in the uptrend that began as the recalls made their way through the market. TM got a good lifet off the March 2009 lows and then started to trade in an up channel oscillating between support and resistance. The break below the 50 and 200 day moving averages in January as the recalls hit were generating a signal to get off the ride and preserve capital.

 

 

tm

The six month chart gives a better view of the most recent action in the stock. TM looks to be forming a double bottom which would signal a trend reversal. There is support at $72.00 and MACD and RSI are close to signaling a change in momentum but are not quite there yet.

When I look at a chart like this I have to admit that they are not my favorite. The stock isn’t going up, its trading below its 50 and 200 day moving averages and the uptrend is broken. In these cases we are trying to anticipate a bottom instead of confirming one. It makes me wonder if we are expecting too much from this company?

That beiing said at times we have to hold our noses and take a position.If you are going to enter TM at this point you have to be prepared to trade it for income as there is resistance at $76.00, then $78.00 and then again on the 200 day moving average at $80.00. If it made a clean run to $80.00 it would generate a return of close to 9.5%.

MAKE IT A HUGE OLYMPICS AND HAPPY CAPITALISM!
 

 

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