9 Lessons to Learn Regardless of a General Motors Bankruptcy
General Motors (NYSE: GM) stock chart offers a wealth of knowledge for both new and seasoned investors. The stock has fallen from a peak $43.20 to less than $5 a share (-88%) in just under 1 year as investors bet on a GM bankruptcy.
By applying simple technical analysis traders can view key buy and sell signals, resulting in smarter and more profitable investment decisions.
Regardless if GM declares bankruptcy there is a lot to learn. Take a look at the following stock chart of General Motors (NYSE: GM) and then read through the numbered points for an added explanation.
Note: Some of these patterns may be hard to see (1,5,9 specifically) so I advise pulling up another chart of GM on your own and taking a closer look.
1. The blue 1 is was arguably the beginning of the end. GM stock broke through huge multi-year resistance and surged above $38. Within five days though GM had already collapsed back under, a bearish sign. This eventually lead to a tumble towards $29 support (2).
2. The blue 2 shows where GM fell below key $29 support.
3. The blue 3 is a great example of how this once support line became resistance as GM rallied back to $29. The rally failed to materialize.
4. The blue 4 shows how GM attempted one more rally which met its end at $29 resistance.
5. The blue 5 shows a small bear flag as GM fell below short term support at $25.50, rallied back to it but could not continue momentum, eventually leading to the stock to fall all the way below $18 in mid March.
6. The blue 6 shows a critical line of support that once broken led to the next big leg down for GM stock. Once the stock fell back below $20 it went on to lose over 50% of its value in just under two months. The stock bottom at $8.81 on July 15th.
7. The blue 7 is the last rally GM pulled together as the stock shot up above $12. It wasn’t but a few days later that GM had fallen back and tested $10 support once again.
8. The blue 8 is where critical $10 support fails as the stock fell on heavy volume to close at $8.51 on September 29th.
9. The blue 9 though hard to see is the latest bear flag which has lead GM to its latest move below $5. It was the last key chance investors had to walk away from the stock.
Further Examples:
- Example 15: General Motors <– Currently Viewing
- Example 14: Google (GOOG)
- Example 13: Apple (AAPL)
- Example 12: Washington Mutual (WM) Bankruptcy
- Example 11: Lehman Brothers (LEH) Bankruptcy
- Example 10: Fastenal (FAST)
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Blain:
I love the analysis, extremely thorough and easy to follow. Your chart area is very helpful and I look forward to its continued growth.
Another great chart Blain. Another exercise that I find helpful is to plot charts and then have major news events tied to the moves. 5 years from now when you might come back to look at the chart, it’s always good to remember what triggered an event. Was it stock specific or tied to a major market move.
Good trading,
TSS
Ya would be a fantastic feature, the only trouble is going back to research what news if any caused the sell off. Will consider it though moving forward, perhaps the more recent action I can include news, we’ll see. Thanks for the feedback!
In response, you could try going to Google Finance and lookup any stock you want and the interactive Flash chart will show news elements related to the stock and where on the time axis that those news events took place.
I find it quite useful but remember that there is usually a delay before you see the investor reaction on the stock charts.
-ray
Great post Blain, you are right that it doesn’t matter if the company goes bankrupt, the lessons are already there to be learned.
very helpful chart Blain, thanks for posting.