Shares of General Dynamics (NYSE:GD) are on fire following this morning’s Q4 earnings report. The stock is up 5% at midday after putting in a new two-week low in the early going. This impressive reversal has driven GD above the December highs. Since the Nov. 9 surge (+5.6%) the stock has been trading in a very narrow range. A close above $157.00 would clear the top band of this pattern, which includes the September high, could spark a fresh rally leg.
The 200-day moving average has provided solid support since Nov. 9 breakout. Most recently it has held the January lows.
Daily MACD has been hovering near neutral for months. A return to overbought levels, equal to those in June, would take quite a move.
Support is now in place between $155.00 and $157.00. This key zone includes the September/November high, multi-week December highs and the initial January high. On the downside, a close back below $148.00 would violate this week’s low, indicating more sideways action is ahead before GD is back in rally mode.
Note: We are long GD in some managed accounts.
You can read Gary S. Morrow's original post here.