General Mills (GIS) peaked back in July and has been under selling pressure for the past nine months. Prices are below the declining 50-day moving average line and the declining 200-day moving average line. The On-Balance-Volume (OBV) line has been weak since early September and suggests that sellers have been more aggressive for months. See the chart below.
While the current condition of GIS looks weak, our favorite leading indicator -- momentum -- has been making a bullish divergence. As prices made lower lows from March to May the momentum has made equal lows. This difference in price action versus indicator is a bullish divergence and can foreshadow higher prices ahead.
In this weekly chart of GIS, below, we can see that prices are below the declining 40-week moving average line. The OBV line is weak and has made a new low for the move down. The weekly MACD oscillator is below the zero line but poised for a cross to the upside. A cover shorts buy signal from the MACD could help in a turnaround for GIS.
In this point and figure chart of GIS, below, we can see that the $56 level is a support zone.
Bottom line -- GIS looks "played out" on the downside. It could take a while for GIS to bottom and try the upside but for now the downside seems limited.
