Cars Have a Reverse Gear Too

General Motors, $GM, started higher in July and in mid December shifted into a higher gear taking it to the January 15th. As it made that top the Relative Strength Index (RSI) turned to being technically overbought and the Moving Average Convergence Divergence indicator (MACD) made an extreme and the histogram was moving towards a cross to negative. Fast forward and it has

gm

shifted into reverse the last two days with the RSI now running lower and the MACD crossed and heading down as well. It is stalling at the 20 day Simple Moving Average (SMA) for now but if that does not hold support lower comes at 28 and there is a gap to fill between 26.54 and 25.54. Filling the gap higher would suggest a short term pullback and continued strength. This picture becomes more interesting when you look at the chart for Ford, $F. Has seemed to be a few days behind GM

f

the whole ride higher. It is still making higher highs but with a RSI in the 80s. The MACD histogram has already stated to fade and we may see a cross in a few days. It is also very far above the 20 day SMA. It does not have to continue to follow GM and turn lower but if it does do you think that 20 day SMA 7.6% lower might be the first target?

Join the Dragonfly Capital Views Premium Membership

Sign up here to get deeper analysis and nearly 50 trade ideas every week.

Dragonfly Capital Views Performance Through December 2012 Expiry

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus
Dragonfly Caps Blog