GM on the Road to Recovery Thanks to China Auto Sales, Barra Town Hall Meeting

NEW YORK (TheStreet) -- Is General Motors (GM) on the road to recovery?

Earlier Thursday it reported better-than-expected sales of its Buick and Chevrolet brands in China and, separately, CEO Mary Barra held a Town Hall meeting for employees that covered the ignition switch recall scandal.

GM stock opened higher and currently trades around $36. But with the stock down over 11% for the year to date, can these gains be sustained?

Traders and investors have been driving GM stock higher since setting its 2014 intraday low at $31.70 on April 11 in anticipation of better auto sales and the company's plans to avoid future issues when recalls are needed.

Let's start with the daily chart for General Motors stock.

Courtesy of MetaStock Xenith

The daily chart shows that General Motors had a significant rally since July 2012 than set an all-time intraday high (for the newly-traded GM) at $41.85 on Dec. 17. The stock began 2014 in a down trend and traded back and forth around its 200-day simple moving average between Feb. 3 and March 11. The stock then traded well below its 200-day SMA, now at $36.39, trading as low as $31.70 on April 11.


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Strength in anticipation of improved auto sales and the recall confession caused the stock to rally above its 200-day simple moving average (in green) on Wednesday. The stock traded as high as $37.04 at today's open but as of 11:00 AM was back to its 200-day, which is a key level to hold at today's close.

Courtesy of MetaStock Xenith

The weekly chart for GM is positive with the stock above its five-week modified moving average at $34.74 (colored in red) as its 12x3x3 weekly slow stochastic is rising (this is the red study below the bar chart). The new GM stock has not been publicly-traded long enough to have a 200-week SMA.

This week's value level is $33.11 with a monthly pivot at $36.67 and a quarterly risky level at $39.58. Our monthly pivot has been a magnet over the past two days.

Investors looking to buy should consider using a good 'til cancelled (GTC) limit order to but weakness to the five-week MMA at $34.74. Investors looking to book profits should consider using a GTC limit order to sell strength to the quarterly risky level at $39.58

At the time of publication the author held no positions in any of the stocks mentioned.

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This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff

>>Read more: GM CEO Mary Barra Moves to Take Command

Richard Suttmeier is the chief market strategist at ValuEngine.com.

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