General Dynamics Corp. (NYSE: GD) — This company is the world’s fifth largest military contractor and one of the biggest makers of corporate jets. Despite reporting Q1 earnings that beat consensus estimates yesterday, the government has made it clear that it intends to initiate broad cuts in defense and aerospace systems that are at the heart of GD’s revenue growth.
Technically, the stock issued a short-term sell signal in late March, when its 20-day moving average crossed through the 50-day moving average, and selling picked up sharply.
The initial target for short sellers is at the 200-day moving average (red line) now at $68. But the stock could even test the 52-week low at $55.
Short sellers should check with their brokers for their ability to borrow shares. And if you are short, be sure to place a stop-loss order at the same time as the buy order to guard against potentially unlimited losses in the event of a rally.
If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.
