General Motors (GM) has declined from around $65 in November and January to around $30 in June and July. This new level is looking more attractive to investors, I believe, so let's see what is going on.
In this daily bar chart of GM, below, we can see that prices are trying to hold in the $30 area in June and early July. GM is trading below the declining 50-day moving average line so we know we are not yet "out of the woods".
The On-Balance-Volume (OBV) line has been stable to slightly firming since April and is leading the way for prices - the OBV line can be a leading indicator at times. The Moving Average Convergence Divergence (MACD) oscillator has been improving from a low in March.
In this weekly Japanese candlestick chart of GM, below, we can see some lower shadows in the area of $30 telling us that traders have begun to reject the lows. The weekly OBV line is still pointed down so traders have not yet made the switch from aggressive selling to aggressive buying. The MACD oscillator is trying to bottom.
In this daily Point and Figure chart of GM, below, we can see a potential downside price target in the $25 area. A trade at $33.59 may improve the picture.
In this weekly Point and Figure chart of GM, below, we can see a $23 potential price objective.
Bottom line strategy: Traders could go long GM above $33 risking to $29. A rally into the $38-$40 area is possible if the broad market averages continue to gain the next several weeks.
