In all the years of my trading career I have never seen an initial public offering as hyped up as the Government Motors Co.(NYSE:GM) IPO. The U.S. Dollar Index declined for the first time in a week and miraculously Ireland is now going to accept a bailout from the European Union and the International Monetary Fund. What great timing they have to do this on the day of the GM initial public offering.
In any case the other major auto makers are looking toppy here on the charts. Ford Motor Co.(NYSE:F) has possibly topped out in the near term over the past three days on massive volume. Today the stock is trading lower by 0.43 cents to $16.22 on extremely heavy volume. This stock would look attractive again around the $14.00 dollar area. However, today’s decline in Ford is clear institutional selling.
Toyota Motor Corp.(NYSE:TM) is another leading auto maker that is now looking very extended on the charts and may be ready for a pullback. This stock is actually trading at a new three month high, however, it is now into important weekly resistance. Therefore, look for a pullback in this name very soon. Should the stock trade higher from today’s level watch the $78.00 level for resistance.
Honda Motor Ltd.(NYSE:HMC) is actually the one automaker that looks to have more upside in the near term. This stock is trading above all of it’s important daily moving averages which is an indication of strength. The uptrend is still very solid and the stock has not yet become extended. However, Honda will have resistance on the daily chart around the $39.25 – $39.75 level. Once that area is reached a pullback or correction would be expected.
Often a major event in the stock market such as today’s GM IPO can often mark a top or bottom in a sector or index. In this case it looks as if it could signal a short term top for the automakers. All of the major automakers are now at or near important resistance. Once this General Motors IPO euphoria fades away watch for that stock to trade lower as well.
