General Motors May Need to Refuel Before Rallying Again

General Motors has been soaring, recently notching all-time highs. Does the stock need to rest after the move?
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General Motors  (GM) - Get Report flirted with a breakdown just a few sessions ago. The stock has been rocketing higher. Or at least, it was. 

Shares were gaining just 1% on Wednesday after being up as much as 6.2% on the day. The fade may suggest the stock needs some time to digest the recent rally.

Investors came into the day excited after an analyst upgrade on the automaker's electrification push

However, the stock hit its high in the first minute of the trading session. By the second minute, GM was up “just” 4.6% before struggling with the $50 mark and ultimately retreated back into the $40s shortly thereafter.

Can General Motors continue this move after it already has hit all-time highs?

It’s push into electric vehicles and its showing at CES sure have investors excited. Let’s look at the charts.

Trading General Motors

Weekly chart of GM stock.

Weekly chart of GM stock.

In November, GM stock proved its stuff. That’s when it held major support after reporting earnings.

That had me bullish on a move up to the $40 to $42 area, a zone of multi-year highs. This area was on a dividend-adjusted chart. It’s worth pointing out that the chart above is not adjusted for dividends.

In any regard, the move down from $46.76 was clear as day, as was the pullback to the 10-week moving average. While shares flirted with losing this support level last week, bulls actively bid the stock back above it.

Not only that, but GM stock closed at a three-week high last week, as momentum was clearly pointing to the upside.

Then GM ripped through $46.76 this week, rallying 4.5% on Monday and an additional 6.2% on Tuesday. Wednesday’s follow-through rally momentarily sent shares north of $50 for the first time, as General Motors hit the 161.8% extension.

This extension is measured from the March low to the preceded 2020 high.

Should GM pull back and rest a bit here, let’s look for one of two things.

First, I want to see the $46.50 to $47 area act as support, after previously acting as resistance. Second, let’s see how the 10-week moving averages acts once it’s eventually retested.

On the upside, a close above $50 could put the two-times range extension in play, up near $58.50.