Shares of General Motors Company (GM) hit a record high on Tuesday, mounting a tough 2017 resistance in the mid-$40s. Unusually strong buying pressure took accumulation readings to new highs at the same time, paving the way for impressive returns in 2021. The old-school automaker has Tesla, Inc. (TSLA) and d ‘other electric vehicles (EVs) for the rise, forcing innovation after years of brain-dead management that couldn’t see past combustion engines.
Key points to remember
- General Motors shares hit a record high on Tuesday.
- The company plans to have 30 all-electric vehicles in production by 2025.
- A 10-year trendline at $50 could trigger a final pullback and a buying opportunity in the mid to upper $30s.
“Robinhood traders” and the younger generation also supported the rise, with industry interest surging due to intense speculation about the winners and losers of the electric vehicle era, finally making bring these high-tech vehicles into the mainstream. The flood of capital is also accelerating research into battery life, in the same way that chipmakers broke arbitrary speed barriers in the 1990s and early 2000s.
GM now plans to have 30 all-electric vehicles in production by 2025 and seeks to establish the highest electric vehicle market share in North America. This should be easier than some people expect, as Tesla hasn’t shown the ability to handle mass production at a level now achieved by traditional manufacturers. Additionally, prices for GM’s electric vehicles are expected to undercut those of rivals who have to pay off huge debts incurred during their growth spurts.
The Wall Street consensus on GM stocks has blossomed over the past year, with a “Strong Buy” rating based on 22 “Buy” and 1 “Hold” recommendations. No analyst is recommending shareholders to close positions and move to the sidelines. Price targets currently range from a low of $43 to a high of $65, while the stock is expected to open Wednesday’s session around $2 below the midpoint target of $52. This placement should support a move towards the barrier discussed below.
Mass production is the manufacture of large quantities of standardized products, often using assembly lines or automation technologies. Mass production facilitates the efficient production of a large number of similar products.
GM Monthly Chart (2010-2021)
The company went public in the mid-$30s in 2010, after emerging from bankruptcy, and hit $39.48 a month later. The subsequent decline ended in the upper teens in 2012, setting the stage for an advance that peaked at $41.85 in 2013. This marked the highest high of a 2017 uptrend that reached $46.76 before turning the page in a failed breakout. A decline through October 2018 held above mid-decade lows, leading to limited range action in a February 2020 breakdown.
The stock hit an all-time low of $14.32 in March and rose in the second quarter. The steady rise climbed the broken support of the 2018 range in the mid-$20s in July, before further gains that reached the 2017 resistance in November. A shallow pullback in December attracted strong buying interest that has now translated into a breakout, generating the highest volume in GM’s 10-year public history.
The monthly chart reveals one final hurdle, with the multi-year trendline of rising highs now sitting at $50. This barrier has triggered three major declines since 2011, warning investors that now may not be the right time to jump in. Price action also moved from an all-time low to a high without a major correction, suggesting that buyers are waiting for prices to pull back, perhaps into the breakout above the red trendline. lower highs.
A correction is a decline of 10% or more in the price of a security from its most recent high. An asset, index or market can fall into a correction either briefly or for extended periods – days, weeks, months, or even longer. However, the average market correction is short-lived and lasts between three and four months.
GM stock hit a record high, but long-term resistance could limit gains in the first half of 2021.
Disclosure: The author held no position in the aforementioned titles at the time of publication.