Strong Reversal! Will GM get back on track? （2024.04.25）

Hello everyone, this week's Tech Tracking analyzes the vintage car manufacturer with a good recent momentum - General Motors$General Motors(GM.US)$.

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Hot Spot Events

On Tuesday, April 23, the price of General Motors shares rose by 4.37%, marking the largest gain in nearly 3 months.

On the news, GM just released its Q1 report, showing better than market expectations; the company took heat and announced adjusted annual results guidance.

Specifically, General Motors Q1 revenue of $430.1 billion, up 7% year-on-year, above analyst expectations of $420.9 billion; earnings per share (EPS) of $2.62, significantly higher than expected $2.12; 2024 full-year results guidance, adjusted EPS of $8.5-9.0 from previously forecast, up to $9.0-9.0 10.0 USD.

In terms of earnings data, GM's net profit has risen year-on-year for two consecutive quarters, again showing signs of a recovery in performance.

Wedbush analyst Dan Ives reiterated GM's “run to win big” rating, saying the Q1 report was a strong “confidence” signal from GM to the outside world, foreshadowing the company's long-awaited turnaround.

Technical analysis

Trend analysis:

1. Against the backdrop of a historic major strike by the American Automobile Workers Union (UAW), coupled with an airbag defect likely to lead to a massive recall, General Motors shares suffered a round of devastating falls in the second half of 2023, hitting three-year lows.

2. To revive investor confidence, GM announced a series of initiatives, including a 33% dividend increase and an accelerated $100 billion share buyback program. Driven by this stimulus, the share price began to rebound from mid-November 2023, and the upward trend will continue to this day.

3. After the release of the report on April 23, the share price rose by 4.37% on a single day. However, as the stock price failed to break above the previous high of $46 for two days in a row, the short-term confidence of the bulls is not enough.

Indicator Interpretation:

• GM's share price has been above the 50-day average (MA50) for 5 consecutive months, a marked mid-term bullish trend.

• On the short side, the MACD indicator shows signs of a cross above the zero axis, but there is also the possibility of a pullback from the top.

• Some momentum swing indicators, such as the KDJ indicator, show a hidden back signal. That is, when the stock price lows have moved up and down over the past time, the KDJ indicator's lows are often seen as a confirmation of the current uptrend.

Direction of attention:

The current uptrend in general cars is well maintained, and in the short term, near $46 is a potential resistance level, and there is some psychological stress on the head. If the share price fails to break through this whole number as soon as possible, there will be greater uncertainty.

On the other hand, the 50-day average can continue as a potential short-term support; whereas a gap formed by the share price rally on April 23 should first be regarded as a persistent gap, followed by a regular gap, if the latter, with a relatively higher probability of a rebound.

This content discusses technical analysis, and other approaches, including fundamental analysis, may provide different perspectives. The examples provided are for illustrative purposes only and do not reflect the expected results.

All investments involve risk, including the potential loss of principal, which cannot guarantee the success of any investment strategy.

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