Here’s your trade on General Motors ($GM) (December 10, 2021)
GM
I am looking at General Motors ( NYSE: GM ). You see the auto companies, we looked at Ford ( NYSE: F ) today on the website, really, really nice breakout here. When I look at Ford ( NYSE: F ), then I immediately look at General Motors ( NYSE: GM ) and I see this is very close to breaking out here. All we need is a little more coiling. We just need to see a little more pinching here and then I would look for the stock to continue higher.
Now, if you look at the weekly chart, this is looking pretty good to me. It comes down here and then rallies up, has a little natural reaction, comes up again to test this prior resistance from last June, right? And then has a natural reaction to a higher low than we saw here and, of course, here, and now it’s looking like it’s ready to go here.
The way I would take this trade is, I would wait for this stock to push above 65.00 and then I would buy the stock. If you are saying, well, I don’t want to wait that long Dan. I’d say fine, then take a little bit of stock now, go ahead and take a little bit. But then keep a tighter stop on it because right now if you just look at where the stock is in the range, this is just the high and the low, it is actually up closer to the top part of the range.
So if you are just looking at the idea that a trend is a trend until it’s not, and in this case, the trend is the stock trading in a box. Then you have got to look at this and say, alright well, it’s only got 2.5 percent of upside but it could have as much as 8 percent downside, so that’s not a good risk/reward for me, it might be for you.
I would just say, go ahead and take a small position, to begin with. If the stock happens to pull back closer to the 50-day moving average, then I think you could take your typical starting position. You never want to just pile in at all one level, you want to kind of gradually be scaling in. And by the way, gradually can mean 3 times over 15-minutes or it can mean 2 times over 15-days, whatever the stock allows you to do. You just don’t want to plunge all of your money into a particular position when you don’t have a profit in it because then it is all risk.
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