General Motors ended last week with a powerful surge. The stock closed Friday with a 7% gain with the help of extremely heavy volume. This news driven breakout took out heavy resistance while leaving layers of support behind.
We believe GM is set up well for more upside. There are still challenges ahead, the first being the November high($39.60). If the stock can convincingly take out this level it will have room to run.
Trading notes: At the October lows GM reached oversold levels(weekly MACD) not seen since the summer of 2012. The daily MACD has been tracing out a divergent low since.
A very solid support band is now in place. The upper band of this zone is marked by a now flattening 200 day moving average($36.80). The lower band is the powerful breakout gap left behind after Friday morning’s big open($35.05). Just above is the upward sloping 50 day moving average.
We consider $GM a buy on weakness.
At time of publication we are long $GM in some managed accounts.