If you’re looking for the intersection of value and growth — look no further than General Motors (NYSE:GM). But if you’re going to hop on-board GM stock, remember to look both ways before you proceed.
Along with what’s been a masterful rebound in price and sentiment in the broader market, there’s been an even more souped-up ride in auto giant GM’s shares the past few months. With the S&P 500 up 24%, GM stock has gained over 32% plus dividends since the broad-based market bottom last December. Nice, right?
Sure, GM stock may not be the new kid driving around the block like Lyft (NASDAQ:LYFT) or a much younger automobile disruptor like Tesla (NASDAQ:TSLA). But General Motors is squarely in the middle of trends like the ride hailing phenomenon — through its 2016 investment of $500 million in Lyft, as well as other important growth markets such as autonomous and EV or electric vehicles.
And importantly, GM stock offers something the others don’t. GM stock offers investors the opportunity to hitch a ride with technological leadership and one of tomorrow’s winners rather than a ride based more on hype and hope than fundamentals.
GM Stock Weekly Chart
Looking at the big picture of the GM stock’s monthly chart over the past several years, it’s easy to appreciate there have technical road blocks and U-turns along the way. And of course, there’s always worries over industry hazards like falling Chinese sales and stagnant U.S. market hurting shares going forward.
But if investors are mindful of the aforementioned and trans-formative industry trends underway, it’s more important to embrace the fact that despite occasional hostile market volatility, month-over-month and year-over-year, shares are trending nicely for General Motor shareholders with the added bonus of a 4.10% yearly dividend.
Most recently this bullish view was reaffirmed when shares reversed forward on higher and above-average volume back above GM’s challenging 2011 high of $32.76. This was accomplished with a monthly hammer pattern which found technical support at the 50% retracement level. To say the least, this was bullish and maybe even trans-formative in its own right.
Buying GM Stock
Looking forward, GM stock continues to look like a strong buy for future growth. Shares are now 8.5% above the high of October’s bullish hammer bottom. That’s the bad news.
The better news is GM’s bottom also marked a slightly stronger higher low pattern low within the existing uptrend as a test of the angular support line wasn’t required. Furthermore, in the here and now and following three months of anxious challenges followed by a more supportive March test of the candlestick’s high; the hammer looks even more durable and worth buying into.
Technically and on a percentage risk basis, a stop-loss set below $36.30 and the high of the October candlestick makes good practical and economic sense. Bottom-line, this exit is also a smart way to avoid any crashes should they come along — and keep investors in position to pick up a market survivor like GM stock amid the wreckage.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
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