Love ‘em or hate ‘em… either way, today looks like a good day to buy General Motors (NYSE: GM).
Here’s what I see in GM’s stock price…
1) GM finds support at $19… bouncing off this level last October and December
2) As GM finds support, the Money Flow Index starts ramping up… suggesting money is flowing back into GM stock.
3) The Money Flow Index hits a high value not seen in over a year… this kick-starts the rally from $22 to $27.
4) Buyers take a breather in February. They’ve bought all they want… for now.
5) GM is now trading in the Fibonacci Buy Zone (50% – 61.8% retracement of the $19-to-$27 uptrend). This is a good pullback to buy if you’re bullish long-term.
Buying GM stock now provides a favorable risk/reward ratio of 1:3. That means you stand to make $3 in profit for every $1 you stand to lose.
If GM has bottomed, a long-term uptrend will eventually take it back up to $39, where it last peaked. So, buying GM around $23 and selling at $39 makes you $16 per share.
If, however, GM sours and makes new lows, a stop loss at $18 would limit your loss to just $5 per share.
That looks like a good deal to me.
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