General Mills, Inc. manufactures and markets branded consumer foods in the United States and internationally. It also supplies branded and unbranded food products to the foodservice and commercial baking industries. The company operates in three segments: U.S. Retail, International, and Convenience Stores and Foodservice. Its products include ready-to-eat cereals; convenient meals, including meal kits, ethnic meals, pizza, soups, side dish mixes, frozen breakfast, and frozen entrees; snacks comprising grain, fruit, and savory snacks, as well as nutrition bars and frozen hot snacks; refrigerated yogurt products; ice creams; baking mixes and ingredients; refrigerated and frozen dough products; and frozen and shelf-stable vegetable products.
Take a look at the 1-year chart of Mills (NYSE: GIS) below with my added notations:
GIS has been trending consistently higher since January, and during that time the stock has formed a clear trendline of support (green). In addition, the stock has also created at 52-week high resistance level at $65 (red) over the past 2 months. At some point GIS is going to have to break one of those two levels.
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The Tale of the Tape: GIS has a $65 resistance and a trendline of support. A long trade could be made on a pullback down to the trendline, or on a break above resistance, with a stop placed below the level of entry. A break below the trendline could be an opportunity to get short the stock.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach