Last week, the venerable old main line industrial,
General Motors popped 14.3%.
For a company like GE, that was a huge move.
You see, GE typically has a weekly average true
range of under $1. So, a move of $3.57 for the week
is almost 4 times the average weekly move.
So, what caused this move?
Well, for one, they announced a deal to sell their
real estate division, GE Capital for $26.5 Billion.
And if that wasn’t enough to make the stock move, they
announced a buy back of $50 Billion.
No wonder the stock popped over 14%!
But, is now the time to buy GE stock?
I don’t think so. Could it pop higher? Yes, but it is
I would wait for it to pullback before I did anything with it.
How can I tell if it is overbought? I use a simple indicator
that lets me know. It could run up more from this level,
but the odds don’t favor that.
In fact, I just finished a book on how to read this particular
indicator and plan to put it on Amazon. I will let you
know when it is up there.
As you know from prior issues of this newsletter, I
track corporate buybacks. You only have to see
how stocks have performed after they announce one,
to realize that tracking them can be a good thing.
In addition to buybacks, I follow insider buying.
I like it when corporate officers are committing their
money to buying their own shares.
After all, who know the company better than the
people working there.
Especially when they make big purchases.
Let me give you a few examples.
Take OPK for example. Back in April of 2014,
te CEO bought around 48,000 shares of stock
at around $8.
If you had invested alongside him, you would
have seen your investment rise to almost $15.
Not to bad. Almost a 90% return just following
Here is another one.
Back in May of 2104, the President of ARAY
bought 50,000 share at $8.15.
Your patience may have warn thin as the stock dropped
to a low of $6.27. From there, it rallied to a high of
Still not too bad, as it resulted in about a 25% return.
I find that the timing of insider buying tends not
to be perfect.
You are better off keeping a watch list of these
stocks and enter off a technical set up.
I especialy like it when the Chief Financial Officer
makes a purchase of their company share.
After all, who in the company has a better view of
the numbers than the CFO?
I usually take note of when they make a buy.
Back in February of 2014, the CFO of FGP bought
10,000 shares, paying $11.63.
Today, the stock trades for $23.51. Not too bad,
as it is over a 100% return.
But FGP traded as high as $27 last September.
By following the CFO you had over a 100% gain in
only seven months.
I like following the footprints.
As the markets grind ever higher, you need a compelling
reason to invest in a stock. And these types of activity
can give you that compelling reason.
You may want to follow this activity and see how it does.
Until next week, trade safely.