General Motors Company designs, builds, and sells cars, crossovers, trucks, and automobile parts worldwide. The company operates through GM North America, GM Europe, GM International Operations, GM South America, and GM Financial segments. It markets its vehicles primarily under the Buick, Cadillac, Chevrolet, GMC, Opel, Holden, Vauxhall, Baojun, Jiefang, and Wuling brand names. The company also sells cars and trucks to dealers for consumer retail sales, as well as to fleet customers, including daily rental car companies, commercial fleet customers, leasing companies, and governments.
Take a look at the 1-year chart of General (NYSE: GM) below with the added notations:
GM had been trending lower before bottoming out in February. Since that bottom, the stock has been grinding its way slowly higher, while stalling at the key level of $32.50 (blue). Now, that $32.50 level has come back into the picture again. A break above that $32.50 mark should lead to another leg up for the stock.
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The Tale of the Tape:: GM has a key level at $32.50. A trader could enter a long position on a break above that level with a stop placed under it. However, if traders are bearish on the stock, a short trade could be made on a rally back up to $32.50.
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