What Can the GM Bulls Muster This Time?

GM emerged from bankruptcy in July 2009. It took another 16 months before investors could buy or sell shares of GM on the New York Stock Exchange.

On November 18, the opening bell rang and investors placed their bets on the country’s iconic car manufacturer. At first, everything looked good. Shares went from $35 to $39.48 in a matter of weeks.

But that was about all the buying bulls could muster.

GM’s stock lost 52% of its value between January and October of 2011! That’s a loss of 52% of GM’s post-bankruptcy, post-restructure value. These were supposed to be the good years!

Here’s a look at a chart of GM stock since its epic 2011 fall.

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Since initially bottoming in October 2011, GM’s stock has bounced up and down in a relatively tight, sideways range. And that’s been frustrating for many retail investors who simply read GM’s sales reports and assume the company is on the mend.

The last two times GM traded up to $26/share, it soon went on to drop back down to $20. Investors buying in at these tops lost about 25% each time.

Now, GM is bumping back up to that important resistance level at $26. So the question becomes: will it roll back over, heading back to $20/share? Or, will it finally break above and begin a new uptrend.

Either way, now is not the time to buy in. Instead, long investors should wait for a pullback to $22 or a clean break above $26 before considering a purchase.

If you haven’t done so already read the Survive & Prosper issue on “When GM Fails Again, What Will it Cost Us This Time?