General Motors Co. building a base near $36.00

Dec 9th, 2015 – 1 Comment

Probably best to wait for better signals to emerge


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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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GM LOGO

 

Hey Lou

I read your analysis whenever they appear on the Globe  website and I am usually inspired by your ability to let the math do the talking instead of the bull or bears.

I recently sold my GM stock at $36 after purchasing them on the pull back to around $30 dollars. I am curious if you could give me an analysis on this stock and where you predict it to move. I am not at all reluctant to purchase the stock again, I just felt it was meeting some resistance and may fall back once more.

What is your analysis on this company.

Thanks,

Terry

 

Hey Terry,

Thanks for the assignment and your kind words. They are both greatly appreciated! This will be the third time since 2009 that I examine the situation at General Motors Co. (GM NYSE). The last time was on January 4, 2010 on a request from Ken. He was interested in buying the shares that represented the bad assets related to the restructuring that came out of the bankruptcy caused by the financial crisis of 2008. The stock was trading for $0.47 on the pink sheets and it was advised that he should run not walk away from the scrap heap. I recommended that there might be an opportunity when the good assets were offered to the public in an initial public offering.

In the final analysis that was the right call. The initial public offering came out at $33.00 per share in 2010 providing a clean slate from an investment perspective.

A probe of the charts will provide the structure for my analysis.

 

GM

The three-year chart depicts a stock that has been exhibiting a volatile trading pattern since topping out near $39.00 in December of 2013. The precipitous drop to the 52-week low of $24.62 in August of 2015 set the stage for a new leg up that has taken GM to resistance near $36.00. It is worth noting that the MACD and the RSI are not indicating that we can expect further gains in the short term.

 

 

 

GM2

The six-month chart illustrates the breach of the uptrend line that supported the bounce off the August low. The MACD and the RSI both generated buy signals in late September when the stock was trading near $30.00. The advance stalled as resistance formed near $36.00 where the shares have been building a base since mid October.

I would advise keeping your powder dry until we have a better sense of direction.

Next time I will examine the charts for Methanex Corp. (MX TSX) on a request from Dave.

 

Make it a profitable day and happy capitalism!

 

 

Categories: Automotive
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