News, views & analysis blogs by: Norm Crowe, TradingMarkets


Norm Crowe, TradingMarkets :
Why I Think GM Is Heading Higher


Norm Crowe, TradingMarkets :
General Motors (NYSE:GM - News) must be desperate, their 2007 Tahoe was released before I stopped dating my checks with 2005, they´ve cut their dividend and they may be considering a sale of their profitable GMAC unit. To top it off, GM´s ineptitude at branding and inability to deliver on design are about to force those not responsible for the company´s struggles into the employment pool. A little depressing, isn´t it?

Instead of seeing this as only bad thing, try looking at it from a purely stock trading perspective: It´s about time GM got desperate! They´ve lost market share and huge amounts of money, and they´re even dealing with bankruptcy rumblings across Wall Street. These are not the qualities of a Dow Blue-Chip company. Fortunately, there are signs of a turnaround - and like usual, the stock may be leading the way:

The first thing I notice when looking at the chart is that the absolutely painful downtrend that GM suffered has come to an end---at least for now. More importantly though, the stock has started to put in a new uptrend channel complete with high-volume price increases and low-volume dips. This is a bullish sign for the stock from here.

Now comes the important part for GM from a trader´s perspective. Because it has recently dipped in price to the bottom of the trend channel (on low volume-bullish again), GM needs to reverse higher here to keep the recent uptrend in place and confirm the longer term reversal.

I will be watching GM over the next couple of days, keeping a close eye on institutional volume trades and opening/closing bell activity.

Hopefully GM´s stock is tipping us off to the pending turnaround in the company´s culture and product quality: Management is losing the "but...but...we´re GM" mentality, production plants are taking on an entrepreneurial, profit-based mindset and the 2008 Tahoe (coming in May?) will get 25 MPG. OK, I will settle for one out of three

John A Larkin
Very interesting article

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