Traders Can Ride Toyota Motor Corp. Even Higher

by Sam Collins | February 11, 2013 7:03 am

Toyota Motor Corp. (NYSE:TM[1]) — Early last year, I recommended selling TM[2]. But in the Nov. 6 Trade of the Day[3], I said it was time to buy again: “Technically, TM broke through its 50-day and 200-day moving averages on a high-volume price gap. Accumulation has been high since October, and this break confirms that the stock is back on track. After a positive reaction to earnings, stocks will often succumb to profit-taking, and so long-term investors should plan to buy the stock under $80.”

TM traded under $80, and as of Friday, is up more than 30% from our purchase price. And even though it is 27% above its 200-day moving average at $82.30, and thus technically overbought, traders should continue to hold TM.

They should also place a trailing stop-loss order at 5% under the current price, thus preserving a solid gain even if the stock succumbs to profit-taking while maintaining the position if it continues higher.

Long-term investors should hold TM since earnings estimates are strong, and the stock is technically in a powerful bull market with price targets north of $120.

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