General Mills (NYSE:GIS) has been a consumer staple stock for many years. Chugging along, printing profits and increasing dividends. It has been a staple in my house as well due to its Cheerios line of cereals. Straight and Honey Nut for my kids. Recently the company released its first new cereal in 15 years. Tiny Toast comes in many varieties and since the only thing my kids eat for breakfast with their Cheerios is toast, is sure to be a hit.
The stock price is loving it as well. The chart below shows strong move higher off of the low made in February to a peak in early April. Since then it has consolidated in an ascending triangle and finds itself at the top of that triangle Wednesday. A break of the triangle to the upside would give a target of 71. The most powerful moves out of triangles are said to occur about 2/3 of the way through the triangle, as it is now.
There is support for a push higher from both momentum indicators and the Bollinger Bands®. The MACD is rising and positive. The Bollinger Bands are opening to the upside. And the RSI, had only a minor pullback in the bullish zone, and is turning back higher. This allowed for a higher low in price. A Measured Move higher from this pivot would give a target to 68.25.
Look for a push to new highs as a buy trigger, then use the prior resistance as a stop. An alternative approach would be to buy it and add a collar in July to protect the downside through earnings June 29th. Buying a July 65/62.5 Put spread and selling an October 70 Call should cost about 20 cents to protect to the bottom of the triangle and still allow 7% upside without adjusting it.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.