11 www.taipanonline.com APRIL 2005 The maker of all those rubbers       So what’s the big deal about GT? Well, just the
other day, Penske Truck Leasing announced GT as its
2004 Tire Supplier of the Year, extending its contract
with the tire maker to 2008. GT’s estimated market
share for original equipment in 2003 in North
America was 41.6% and 23.6% in Europe.       Just in case you didn’t know, Goodyear Tire &
Rubber not only manufactures tires, but also belts,
hoses and other rubber parts and related chemicals
for vehicles. That gives it flexibility and long-term
relationships with its customers. Selling equipment
that needs periodic maintenance can be much more
lucrative than selling disposable products.       GT posted net sales of 15.1 billion in 2003. Profits
from overall 2004 and the fourth-quarter are yet to be
announced. But in the nine months ending
September 30, 2004, GT’s sales rose 21% to US$13.53
billion. And losses decreased by a whopping 97% to
US$12.3 million because of a decrease in rationaliza-
tion costs and other operating expenses. Peeling wheels to the top A look at the weekly chart shows a succession of recent highs corresponding to Momentum tops and
bottoms, along with a healthy Bollinger Band
pinch/paunch pattern. Currently, GT is at a Momentum bottom and a pinched band, making me
extremely bullish on the company for an upcoming
short-term bounce… especially since it looks set to
bounce from the Bollinger average for the first time
in recent history.       Between every bottom and top on the Momentum
indicator, GT has risen in price by US$2.00. And the
most recent rally, consisting of 11 out of 15 positive
candlesticks, pushed GT’s stock from US$10 to
US$16. That’s 200% more than the average rise.       In this chart I’ve also focused on the price volume
trend. This indicator is based on a calculation of the
percent change in price from a previous bar’s close to
the current bar’s close, multiplied by the volume,
added to a running total, then plotted on the chart.
Comparing the price volume trend to the general
direction of stock can be very helpful in finding rever-
sal patterns.       Since the price volume trend is in harmony with
the rising trend in GT’s chart, Goodyear Tire and
Rubber is going to continue on its course.       With its current price under US$15, GT is an
undervalued stock. It’s the number-one tire company
in the world. If you’re a long-term buyer, pick up shares of GT anywhere under US$16.00. To play the
strength of Goodyear Tire & Rubber in the short
term, I suggest playing the GT October 15 calls (GT
JC). Pay no more than US$2.10 for them.  Time to Open Your Eyes
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