General Dynamics Corp. (GD) exploded higher this month. We reviewed the charts of GD in early December and played economist with a two-handed outlook: "In this Point and Figure chart of GD we can see the uptrend but also that a break of $193.55 will have bearish implications. If prices do not retreat a $218 price target is projected. Longs should consider raising their stop protection to a close below $193 as a break of this level is likely to produce further weakness." Prices did not test or close below $193 and GD rallied to $218 and continued up almost to $230. Defense companies may get a boost from Tuesday night's State of the Union address so let's check out GD again.
In this daily chart of GD, below, we can see that the current up-move got started in late December. Prices rallied above the 50-day moving average line and tested the rising 200-day line. Volume surged last week as prices jumped sharply. The daily On-Balance-Volume (OBV) line made a new high and the Moving Average Convergence Divergence (MACD) strengthened.
In this weekly bar chart of GD, below, we can see how prices soared to new highs last week. GD is above the rising 40-week moving average line after testing that line in November and December. The weekly OBV line has been positive since early 2016 and is close to a new high. The weekly MACD oscillator is crossing to the upside from above the zero line for a fresh outright go long signal.
In this Point and Figure chart of GD, below, we can see the two-year uptrend and an ambitious upside price target of $297.65.
Bottom line: After trading sideways around $200 since June, GD broke out on the upside. Prices could continue to trade higher but a period of sideways consolidation would be preferred before heading towards our next price target of $298/$300.