A Multi-Month Rally Is Cooling and It's Time to Nail Down Profits
I have not reviewed the charts of defense contractor General Dynamics (GD) since February 1, when I wrote that "Aggressive traders could probe the long side of GD in the $265-$260 area. Risk to $255. The $300-$305 area is my price target for now."
Let's check out the charts again as prices recently reached our target area of $300-$305.
In this updated daily bar chart of GD below, I can see that prices traded steadily higher since early February. Prices traded above the rising 50-day moving average line and above the bullish 200-day line, and the On-Balance-Volume (OBV) line shows strength from early February to confirm the price gains. The Moving Average Convergence Divergence (MACD) oscillator is in a small correction but has been above the zero line since October.
There are several bullish indicators in GD's daily bar chart.
In this weekly Japanese candlestick chart of GD below, I can see an uptrend that might be ready to pause. Prices traded above the rising 40-week moving average line. The three most recent candles represent a top reversal pattern. A top reversal could mean a turn lower or a turn sideways. Either of these moves would be a "trend change." The OBV line has been trending higher since late May but it may slow in the weeks ahead. The MACD oscillator is above the zero line but it has narrowed and is close to a downside crossover.
The weekly GD charts suggest an uptrend might be headed for a pause
In this daily Point and Figure chart of GD below, I can see a price target in the $455 area.
The daily GD Point and Figure chart outlines a specific price target
In this second Point and Figure chart of GD, below, I used weekly price data and here the software gave us the same $455 price target as shown on the daily chart above.
And a second Point and Figure chart reaffirms a price target.
Bottom line strategy: The pace of the rally of GD is slowing and it has reached our price target — two good reasons to nail down some profits. After a correction, we may want to repurchase it.
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