General Mills, Inc. manufactures and markets branded consumer foods in the United States. It operates in three segments: U.S. Retail, International, and Convenience Stores and Foodservice. The company offers ready-to-eat cereals, refrigerated yogurt, soup, meal kits, refrigerated and frozen dough products, dessert and baking mixes, frozen pizza and pizza snacks, grain and fruit and savory snacks, stable and frozen vegetables, and ice cream and frozen desserts, as well as various organic products, including meal kits, granola bars, and cereal.
Take a look at the 1-year chart of Mills (NYSE: GIS) with the added notations:
GIS had been flying high up until mid-summer. After peaking near $72, the stock started a decline that led to the recent sideways range. While in the range, the $60 level has become key support. GIS looks like it is about to test that $60 level again, and if it does, a bounce could be expected. However, if the $60 support level breaks, lower prices should follow.
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The Tale of the Tape: GIS has a key area of support at $60. A trader could enter a long position at $60 with a stop placed under the level. If the stock were to break below the support a short position could be entered instead.
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