GM Stock Shifts Into High Gear. Can It Speed Past Resistance?

-- Shares of General Motors are racing higher after an earnings beat. Can it drive through resistance? Here's the level to know now. --

By Bret Kenwell, TheStreet.com

Shares of General Motors (GM) traded higher on Tuesday, up 3.6% after the auto giant reported earnings before the open. It's up another 2.5% at last check Wednesday.

The company reported a 49% year-over-year surge in earnings to breeze past analysts' expectations.

Revenue jumped more than 50% and slightly missed estimates. Still, the company reported record sales in the quarter and reiterated its full-year outlook.

The report and rally come after Tesla (TSLA) reported a mixed quarter last week and a day ahead of Ford's (F) report on Wednesday.

While earnings and revenue growth from the automakers is strong, there is a general concern about the group as a majority of economists predict a recession in the next 12 months.

That concern, paired with a bear market in U.S. equities, has hammered stocks like General Motors this year.

Trading GM Stock

Daily chart of General Motors stock

Chart courtesy of TrendSpider.com

GM stock is now riding a four-day surge. The shares are now higher by almost 15% in that stretch.

With yesterday's rally, General Motors filled the gap at $37.19 from Sept. 22. But it was stalling as it tested into the 50% retracement and the 50-day moving average.

The shares closed indecisively on Tuesday but are powering higher on Wednesday. Now that the shares are testing into the 61.8% retracement, the bulls are keeping a careful eye on GM stock.

They want to see the stock clear the $37 to $38 area, which is littered with the key measures mentioned above. If GM can clear this zone, it puts a much bigger area on watch, between $40 and $42.

There we find resistance from the summer, as well as the 200-day and 200-week moving averages.

What if GM stock can't rally beyond the $37 to $38 zone?

If the current zone is resistance, then the bulls need to see where this stock finds support on a pullback. Ideally, that will come into play around $35.

In that area, we have recent resistance, as well as the liftoff level ahead of the earnings. It's also where the 10-day moving average comes into play.

If the stock really starts to sell off, the bulls don't want to see it break below $33. That would open the door back down to the $30 to $31 zone, which has been strong support this year.

The bottom line: For now, the bulls are in the driver's seat, but GM stock is driving right into a key area on the chart. Let's see how it responds.

From TheStreet.com