Monday, November 9, 2015

GM General Motors Daily Chart Inverted H&S

The GM chart is interesting since it displays a textbook inverted head and shoulders pattern (H&S). A regular H&S is a bearish pattern; an inverted H&S is a bullish pattern. The green bars show the head at 27, left shoulder at 30 and right shoulder at 28.5. The neckline is at 32-ish so when price poked up through it was off to the races. Price should have back kissed the 32 level but instead ramped higher as the central bankers goosed stock markets off the August-September bottom with money printing.

Price hits resistance at the 36 level. The target for the inverted H&S would be 37 based on the head at 27 and neck at 32, that is a 5 difference, hence 32+5=37. The RSI and MACD line was long and strong when the last price peak occurred so there should me more upside juice. The MACD line on the weekly chart is long and strong so GM should receive further buoyancy achieving the 37 goal during November. After that there is likely lots of sideways ahead.

Car sales are at record highs so how long can that last? Especially in a sick economy. The purple lines show a gap-up move so price is now on an island and if it falls to 34.5-ish, then gaps back down through to 33.8-ish and lower in a heartbeat that would be an island reversal pattern. Of course price may also simply retreat to fill the gap and retest the 200-day MA.

So GM likely has a couple more weeks or so of buoyancy to the 37 target but that is likely it. From there probably sideways through 34.5-37.0, maybe 38.0, for a couple-few months then the expectation would be for price to roll over lower filling the lower gap, or creating the island reversal, and  back kissing the 200-day MA and even the neck line of the inverted H&S at 32-ish in early and mid 2016. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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