Goodyear set for further falls

GT goodyear tyre daily chartAnother of the stocks I monitor regularly is GT Goodyear Tyres, and in my post of the 5th August entitled Goodyear Tyres On Slicks  , I suggested this stock was set for further declines. And yesterday’s price action has done nothing to change my view as GT closed gapped down on the day at $11.92 per share.

Yesterday’s price action was also significant as the price broke away from the congestion at $12.50 and which now presents a barrier of resistance to any recovery. In addition, and to add further to the bearish sentiment, a low volume node is immediately ahead at $11.50 with the trend monitor indicator confirming the bearish picture.

Good year tyres monthly chartTo find out where the stock is heading longer term, we need to consider the monthly chart, which looks ominous. However, the chart is also highlighting GT is likely to rebase around the $9 per share level in due course with a possible test of the $8.53 low last seen in 2011. The all time low is $3.17 which, at the moment seems an unlikely target in the short term.

For longer term investors looking for an opportunity this stock will require patience, as GT is set to fall further before an extended consolidation phase develops in the $8 – $9 price region and provided we see active buying by the market makers at these levels followed by a successful low volume test recovery should follow. All of which is likely to take months, and as always Wykoff’s second law of cause and effect will dictate the extent of any recovery. In other words, the longer GT is in consolidation, the more sustained will be the recovery.

By Anna Coulling

Charts from NinjaTrader and indicators from Quantum Trading

About Anna 2016 Articles
Hi – my name is Anna Coulling and I am a full time currency, commodities and equities trader. I have been involved in both trading and investing for over fifteen years and have traded many different financial instruments, from options and futures to stocks and commodities. I write and publish articles ( mostly for free ) for UK and international publications on a wide variety of financial issues, and in particular I enjoy helping others learn how to invest and trade.

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