GM/FORD

another casual but not final victim of the credit crunch might be GM/FORD. Chrysler has been privatized so it is not easy to gauge when it will fail.

with current market conditions, all hell broke loose and there are reasons for slow sales:

1. consumers' priorities now are to keep the house, put food on the table and get to work, none will induce customers to purchase another car or replace an old one. the decision will only be delayed further and further into the future which hurt car sales. unless car companies offer employee prices to most customers like GM did recently, there is very little incentive to upgrade cars or buy a new one;
   
2. car companies do not lease cars to customers any more as it now costs more to finance a lease and residual value of the car after the lease is much less than previous years;
3. fleet sales will also be hurt due to less business travelers thus car rental companies need not upgrade their fleet as frequent as before.
4. aging is a factor that slows sales. current market turmoil had not been mentioning this factor lately.
   

both charts dont look too good, but GM's looks worse.

the 3 tops chart of GM looks likely to test south of the neckline now at 10 which was already broken on friday's close. since this is only a 3 month chart, it is highly likely that in the next month or so, it will test a low of 6 or even 4 if credit market conditions do not improve.

GM is unlikely to fail like that of aig once past the 10 dollar mark as indicated with ford's price now at 4.8 [it dropped below the 10 dollar mark back in 2005 and even earlier], but a failure will hurt triple the number employed by GM as many suppliers will go bankrupt too.

so watch out the stock price of GM/FORD if you are in the stock market still.