Trading the GM IPO could be one of the better opportunities of the year. General Motors has gone from being the world’s biggest auto maker to bankruptcy and back in just a year or so. This version of trading catchups could be quite profitable. As GM emerged from bankruptcy it lost money in last year’s third quarter and last year’s forth quarter results are expected to be profitable. The huge amount of restructuring and removal of bureaucratic bloat is expected to make the new GM a competitive company. A new, effective GM could be well positioned to take advantage of increased sales as the recession wanes. In the case of GM, where in the world the action will be may well be right here at home.

Trading Toyota is still possible as the company that is now the world’s biggest auto maker deals with recall issues regarding computer assisted brakes. General Motors, which slowly but surely lost its dominance due to a number of issues, is now a startup! The company has huge assets and the ability to make competitive products. So, how do we go about trading the GM IPO? The initial public offering of the new General Motors stocks will be fixed. The price for the IPO will be based on a fundamental analysis of the worth of the stock as well as the public’s willingness to pay. After the IPO is offered there will be stock trading subject to technical analysis. One common pattern is to see a stock rise substantially after the issuance of a popular new stock. Then profit taking is common. Thus a common chart pattern is an ascent to a peak and a drop to below the initial public offering price. What typically then ensues is a slow recovery to what will be the usual trading range. In this sort of post IPO pattern traders can find opportunities on both the rising and falling phases.

We are neither promoting GM nor suggesting that you avoid trading the upcoming IPO. We are also not making predictions about how the stock will perform after the IPO. Our suggestion is to keep an eye on the situation. Be aware of the fundamental and technical factors involved in the revitalized auto maker. Whether the resulting chart formations are variations of a head and shoulders pattern with the stock’s ascent and reversal or another common pattern, knowing your trading patterns and being ready could well lead to profits. Trading the GM IPO may involve scalping versus momentum trading as the first stock movement after issuance of an IPO typically takes place over days and weeks as opposed to months. If GM turns out to be a very successful and profitable company in its reincarnation it could become momentum stock as stock price climbs.

As the year progresses keep track of GM. This year will be a good time to gain perspective and anticipate the market, trading the GM IPO included. With Toyota back on its heels from the recall issues GM may have a chance to win back customers that it long ago lost to the current market leader. GM will need to do a lot of things right to make it back to number one but watching its progress will be interesting and could be profitable.

Related Articles

• Futures Rise; Auto Sales in Focus (online.wsj.com)
• Ford sales jump; outsells GM on strong car demand (seattletimes.nwsource.com)
• Ford Beating GM May Be ‘New Normal’ on Vehicle Lineup (Update1) (businessweek.com)
• Dow industrials for startups? Pre-IPO index opens (seattletimes.nwsource.com)
• Obama’s team wants fast-track GM IPO: Bloom (financialpost.com)

Popularity: 36% [?]

Related Content

Subscribe to the post comments feeds or Leave a trackback