Shares of General Motors (GM) were down slightly on the day, off about 1%, but have risen more than 5.5% this week.
Most of those gains come from Tuesday, where shares rallied 6.75% - and as much as 9% at one point - ahead of the introduction of GM's new electric Hummer.
General Motors has cleared some notable levels over the past few days and it’s got investors wondering if it can find some fourth-quarter magic. If so, this one may continue higher and its EV Hummer may be the spark.
Like GM, Ford (F) caught a boost in mid-July when it introduced its new Bronco vehicle.
While Ford shares didn’t go on an unstoppable rally from there, the technicals continued to hold and up and still sit at its post-coronavirus highs.
Can GM put together a similar run? The automaker is hoping its 1,000 horsepower, 350-mile range, $112,595 EV keeps investors excited, even though it won't be launched until Fall 2021.
Trading GM Stock
In my view, the first meaningful observation is the 200-week moving average. Over the years, this has been a critical level, acting as both support and resistance over that time.
Most recently, it was resistance in September. Last week, GM rallied right to the 200-week moving average, ending just two cents off its weekly highs. This week, GM is pushing above this mark with authority. I want to see this level hold as support going forward.
If it can, bulls will be in control. On a break below, see if the $32 mark and the 10-week moving average can support GM. If so, it’s less ideal but still decent price action for the bulls.
Below $32 and the stock starts to run into issues. Specifically, it could put sub-$30 in play.
Because the stock has already rallied so much this week, the upside becomes a bit more difficult to define. However, let’s use this week’s high and the 161.8% extension from the July low to the June high.
Those marks come into play at $36.37 and $36.81, respectively.
If GM stock can clear these two marks, it opens the door to the $39 to $40 area. If General Motors can get that high, that’s where it may start to run into issues, as there are numerous resistance marks in play.
Just as a note, the automaker is scheduled to report earnings on Nov. 5.