General Motors (GM) - Get General Motors Company (GM) Report is leaving behind another ominous high. The stock appeared headed for an upside breakout as this week began, but instead, GM left behind an ugly downside reversal. Shares have been drifting lower since, and are setting up for more downside as heavy resistance near $39.00 continues to weigh on the action.
At the January highs, GM was battling the $39.00 area, but was unable to extend the powerful post-election rally. By late in the month, it was clear a healthy pullback would be needed before new highs could be reached. GM drifted down to a very solid support zone near the November peak in early February and had built a solid base just before Feb. 14's powerful breakout. GM's 4.85% surge on Feb. 14 sparked a fresh rally leg, but the stock was unable to mount a challenge to the $39.00 area. This week GM appears to have lost its momentum and is headed for another pullback.
As this plays out, patient GM investors should keep a close eye on the $35.50 to $34.50 area. This key support zone includes the Feb. 14 breakout gap near the upper band and the initial post-election high near the lower band. If the stock can regain its footing here, a low-risk entry opportunity will develop for this A-rated stock. On the downside, a close below $34.00 would send a clear warning sign that a deeper pullback is on the way.