Shares of General Motors Company (NYSE:GM) have stalled over the past couple of weeks after a post-earnings rally. While the slowing global growth story will hardly act as a tailwind of sorts for GM stock, at least a moderate further lift in the near-term looks likely — at least if you’re looking at the technical picture.
Active investors and traders should look to buy GM stock for a play once the current consolidation phase begins to resolve to the upside.
On Oct. 21, General Motors reported its latest quarterly results. Revenue of $38.8 billion came in below the $39.3 billion reported in the same quarter a year ago. GM blamed the revenue weakness on a stronger dollar like so many other global manufacturers also did this year. U.S. demand for trucks and SUVs, however, remained robust and helped keep up profits.
Investors seemed upbeat about the results, and after already chasing GM stock higher off the August lows, bought some more.
GM Stock Charts
If we look at GM stock through a multiyear lens with weekly bars, a sound technical picture emerges. When General Motors had its initial public offering in November 2010 (coming out of bankruptcy protection) it didn’t take long before shares began to roll over. After about a 12-month bottoming process, GM stock began to ascend in late 2012, and in 2013 nicely extended this rally. Ever since late 2013, however, the stock has largely traded sideways with a downward bias.
At the August lows, GM stock for the first time retested the red dotted horizontal line, which had acted as resistance during the 2011-12 bottoming phase. This retest was important through the longer-term lens and quickly pushed the stock back higher where it is now, consolidating below diagonal resistance that stretches back to the 2013 highs.
On the daily chart, we see that after a strong bullish reversal where bears quickly and very visibly got exhausted in late August, it was off to the races. GM stock then quickly worked back above its 50- and 100-day moving averages (yellow and blue lines respectively). On Oct. 21 after the latest earnings report, General Motors shares took another leap higher, and this time overcame their red 200-day MA, above which they have been basing/consolidating ever since.
This current juncture for the stock also coincides with horizontal resistance from the May/June period this year.
Active investors and traders could look to buy GM stock on a push-and-hold above $36 for a rally toward $38.50.
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Successful trading and investing starts with a plan. Download Serge’s essential trading plan, The Essence of Swing Trading e-book. As of this writing, he did not hold a position in any of the aforementioned securities.
