Cars Have a Reverse Gear Too
- Posted by Greg Harmon
- on January 17th, 2013
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
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
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?
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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