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How to Trade General Motors After the Automaker Reports Earnings

General Motors has been under pressure ahead of earnings. Will the quarterly report propel shares higher or will the brakes be applied even harder?

General Motors  (GM) - Get General Motors Company Report has become a Wall Street favorite as its push toward electrification has made it a more appealing stock to investors.

Ford  (F) - Get Ford Motor Company Report has done the same thing, as the group has seen the immense momentum in Tesla  (TSLA) - Get Tesla Inc Report, NIO  (NIO) - Get NIO Inc. (China) Report and others.

Ford and GM aren’t alone, either. Plenty of traditional automakers have made a similar push, while a whole host of SPACs have come to the market with various EV offerings.

GM is doing more than navigating the currents of the EV market though.

It’s also contending with a chip shortage that’s holding the auto industry hostage, while maneuvering through volatile economic markets due to COVID-19.

As a result, the stock has had trouble rallying lately, although it did hit new all-time highs in April. Let’s look at the chart to see what opportunities could be in play after the company reports earnings on Wednesday before the stock market opens.

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Trading General Motors

Weekly chart of General Motors stock.

Weekly chart of General Motors stock.

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Look at how strong the rally has been from the 2020 lows for General Motors. While we could say that about many stocks, I bet that not many investors would have expected this type of move for GM when it was down 12 to 14 months ago.

Amid that run, the stock has been pretty responsive to some of its key technical levels.

Specifically, the 10-week moving average has been consistent support for multiple quarters now.

After two consecutive weeks when General Motors stock broke below this measure but failed to close below it on a weekly basis, it’s back below it again. Shares are also into the notable $55 area.

Obviously, earnings could act as a huge catalyst as to whether GM holds this support zone or cements it as possible resistance.

On a bearish reaction, let’s see if the 21-week moving average holds as support. If tagged, it will be the stock’s first touch of this measure in almost a year, showing just how strong the trend has been.

Below that opens up the $50 area, which was solid support earlier in the year.

On the upside, I want to see GM reclaim its 10-week moving average. Back above that measure could put this month’s high in play near $58. Above that and $60-plus is possible, putting the April high in play near $63.50.

Keep in mind that after such a powerful run, GM may need some time to consolidate. Let’s see how it reacts to earnings before making a move.