I am still long GM and bought a second load of 4K during yesterday's reversal. It's a tough thing because I want you guys that are short to make money too, which you already have a bit. Ice I have a range of prices that I am using to accumulate a large position. Once the price enters the range I begin buying. It's the same with shorts for me. The basic premise is that when I think a stock is topping or bottoming I scale in. Recognizing that I cannot predict THE top or bottom, I use a range. If the stock exits the range on the losing side, each successive buy incurs a smaller loss. So I guess you're right, all the way down is limited to the range. I began shorting CAT and MCHP the first part of this month, and like GM they went against me initially, but did not exit my range. MCHP worked out more quickly than CAT, but CAT has rolled over a bit the last 3 days and and I have a pretty good profit in it with 12K shares. I am short only 8K MCHP, which is working out real well so far but we'll see. Good luck shorts... 30 still seems real to me too.
Good call on CAT, Jordan. :eek: You've definitely got me interested in a longterm short postion in CAT as well. I really like the downside potential in CAT. You hold onto your short positions months and months at a time?
DE (John Deere) is in a lot 'worst' shape than CAT, or GM. Been short, large position, in this one for over 3 months. They've got some serious problems with pensions (not as well managed as GM's pending disaster even), their sales are missing expectations (substituting financing/subsidized leases for product sales) and they've got other issues as well. Good-Luck all, here's a chance to clean up America's old industries and clean up our personal debt issues as well (I hope!). Targets - GM $30-$31, DE - $39-$41. Don't know enough about CAT (yet) to bet my money (margin) on it!
It seems to me that there is absolutely NOTHING in the charts to suggest that GM is heading for higher ground in the next few months. Weekly, the charts are in a roll over. Maybe you are right, I don't know.
Jordan, If you had entry points where to buy your GE, why don't you sell put? Instead of waiting and average down, you sell front month puts with strike price @ your entry point. If GE goes down, you'll have to buy, which was your initial plan, but you've collected some premium. Cheers!!
Doji, I know you mean GM and I appreciate the suggestion. However I am also interested in the dividend. And, scaling in is not averaging down. Averaging down is a loser strategy. It is done to lower the breakeven point by lowering the basis. I don't trade to breakeven. You've been around... I know I'm preaching to the choir. Isu, I set targets and re-evaluate if they are reached. Days like today make holding tough. Giving back profits is very hard to endure. I am hoping the 50 day sma continues to provide the resistance it did today. dgabriel, technically there is a divergence between price and MACD on the weekly chart. As you know, sometimes a triple divergence will set up too, which I suspect will be the case if GM sees 30. The only reason I think near 30 is in play is because of that gap coming off the lows of this year. Subjectively, again on the weekly chart, GM historically gets about this far from the 200 week sma and then moves back to it. I presently have 8K shares. My risk on this trade with no more shares is ~$30K. My target is 53-54, or about $150K... lol... plus the dividend. That's a 1:5 risk/reward ratio or better. If I get the whole 20K shares those numbers will change a bit. Clearly there will be resistance along the way at the 35-37 range, more at 40, and more at 50. And that's if it does go up. There is always the sideways action, but if the dividend stays the same or near it, I'll yield pretty well on that block of money. Heck, tomorrow it could tank and I'm out... or selling calls. Good luck howell and isu.
GM is actually trading at a minor support level.. if the red line in my chart breaks the chances of testing the $30 level increase substantially... If support holds.. most likely the first objective will be to test the 4/23 high of 37.50... good luck, --MIKE