General Motors: Are We There Yet? No

 | May 18, 2017 | 2:47 PM EDT
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General Motors (GM) looks like the parking brake is not on as prices slide lower. GM made a strong effort to move higher in December, January and into March, but these three pushes to the upside had weakening momentum readings and the On-Balance-Volume (OBV) line failed to make a new high. This set the stage for the weakness we have seen since March.

The decline does not appear to be over and it is going to take aggressive buying and not incentives to stabilize and rally prices in the weeks ahead. When we last looked at GM, we weren't sure what to do: "I honestly don't know whether we should be in drive, neutral or reverse. Let's check in with GM in a few weeks." Here we are!

In this daily chart of GM, above, we can see that since we last looked, prices have fallen below the rising 200-day moving average line and then rallied to the underside and failed. The 50-day moving average is in a downtrend and could soon cross below the 200-day line for a bearish death cross. The On-Balance-Volume (OBV) line has been edging lower since March and tells us that sellers are being aggressive. The 12-day momentum study shows a bullish divergence since March but it has not impacted prices in a positive way.

In this weekly chart of GM, above, we can see prices have closed below the rising 40-week moving average line. The weekly OBV line has been weakening the past five months and the Moving Average Convergence Divergence (MACD) oscillator is almost below the zero line for an outright sell signal.

In this Point and Figure chart of GM, above, we can see how prices are making lower lows and we have a nearby price target of $30.41.

Bottom line: Shares are no longer in drive or neutral. Reverse is the direction and GM looks likely to move lower in the weeks ahead.



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