— 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 [1]
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
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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 [1]