GM General Motors Monthly Chart; Rising Wedge; Negative Divergence; UAW Strike Provides Insight into America's Future Class War

50K General Motors union employees are bringing production to a standstill at 50-plus plants across America. The General Motors UAW (United Auto Workers) are on strike. The strike comes at an interesting time. Global economic activity is slowing and the US is likely heading into recession at any time forward. Peak Auto has likely occurred.

The workers made sacrifices and concessions to keep the automaker afloat during the Great Recession in 2008-2009. GM was bailed out along with the banks and other institutions such as AIG which handles government money discreetly and would not be permitted to go bankrupt. Comically, idiots actually think that free markets and capitalism exists. Bailouts are the exact opposite of capitalism.

America is best described as a faux free market crony capitalism system. Everyone loves capitalism when the stock market is moving higher year after year but once a crash occurs, the weak companies are not weeded out (which is what is supposed to happen under capitalism). Instead, these sick banks and companies, that already raped the financial system for many years, are saved to protect the wealthy elite class that own huge stock portfolios. It's not rocket science.

As Keystone has said many times, the expectation ahead is that once the recession hits, the mood across America will darken. The huddled masses have suffered for a decade under structural unemployment and high debt while watching the wealthy dance with glee and brag about their stock portfolios daily (stocks rising higher courtesy of the central banksters that will receive their quid pro quo's from the Wall Street investment banks when they resign from public life). The crony capitalism system is on full display.

Once the recession turns the mood ugly, America will be looking for someone or something to blame and the rich will become the target. A class war will begin in the United States with protests and violence not seen since the race riot days of the 1960's. The cycles always come 'round again. America's wealthy class will be the targets of the huddled masses that walk down Main Street with pitchforks and torches.

Sad to say, and hopefully it does not occur, but the elite wealthy class in America will become targets of disdain and violence. Politicians and corporate CEO's and executives will experience public ire. Protesters will gather at residences of the wealthy class; CEO's will begin freaking-out at such demonstrations and worry about their safety. McMansions will burn. The rich will probably seek refuge in gated communities with security guards. There is likely a lot of sad and tragic stuff on the horizon. This dreadful outcome is created by the central banks that rewarded the wealthy over the last decade at the expense of everyone else. America's wealthy class, synonymous with human greed, destroyed capitalism over the last five decades. Most of the family generational wealth you see is dirty money.

If you have money, don't flaunt it. China sees class wars coming since a couple years ago they outlawed many displays of wealth by individuals in their communist society.

The reason this is all so fascinating is the timing of the GM strike. The workers are quick to say that they helped General Motors years ago but the company has not returned the favor. More importantly, the average GM worker has an interesting perspective. They are saying  the strike is for all of America and they are fighting for the little guy that has been trampled like dirt over the last decade. Perhaps America's class war is beginning faster than thought?

It is shameful that nine years after GM is saved, it is rated at or near junk by the rating agencies. Of course the wealthy elite class was saved and they took their money and moved on. The privileged class controls the rigged game.

GM scaled up production in recent weeks preparing for a strike. The car lots are stacked-up with cars but folks do not have the money to buy them. The union demands may send GM into bankruptcy again. Both sides typically lose after a strike. The huddled masses may not care if General Motors goes bankrupt again. The workers did their part to save the company after the Great Recession but the automaker never returned the favor. Why would you ever want to help them again?

All this political mumbo-jumbo aside, the chart displays a nasty red rising wedge. The failures from rising wedges can be quite dramatic. The red lines show the universal negative divergence that creates the spankdown off the top. Note how price is trying to hold that 20-month MA support at 36.25. Yesterday's LOD is 36.18 and GM closes at 37.21. If 36.25 gives way, the stock is in a heap of trouble and will likely target the 50-month MA at 32.93. The chart is bumping sideways currently. Bears will need the RSI and stochastics to drop below 50% into bear territory.

If in GM, it is likely a good time to scale-out. The stock will likely pop if a resolution to the strike is reached. That wlil likely be a good shorting opportunity. On a longer term basis, you can likely open a short on GM and add to it each month forward. By Q1, you will likely be a happy camper. Keystone does not hold any position in GM currently, long or short. If it was played it would be on the short side but the strike resolution is a wild card for strong upside. 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.

Note Added Wednesday Morning, 9/18/19: European car sales tank -8.4% the largest monthly drop for this year thus far. Peak Auto is here. Nissan sales are crushed. Germany and Japan, two top car makers, are slapped in the face. Steelmaker NUE lowers guidance blaming a softening auto market.