A little over a month ago, on December 2nd, we published “General Motors Poised For a Correction?” to warn you for the weakness suggested by the Elliott Wave Principle. While General Motors(GM) stock was flying above 36.20, here is how we saw things.
We thought the stock is likely to fall, because there was a five-wave impulse to the upside. According to the theory, every impulse is followed by a correction in the opposite direction. That is the only information we needed, in order to form our bearish opinion on General Motors stock. And here is how the situation has been developing since.
Yesterday, the stock closed at 31.22. That is more than five dollars per share lower than where it was, when the forecast was published. The Wave principle once again shows its ability to prepare traders and investors for the troubles, which might be lurking just around the corner. From this point on, General Motors stock could be expected to start recovering, since the five-wave sequence shows the direction of the larger trend – up. In our opinion, the stock is much more affordable now. Furthermore, its risk/reward ratio is improved with invalidation level at 24.70. As long as it stays untouched, the bulls should not give up. Their first main targets lie above the 37-dollar mark.
