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General Motors: If We Skip The Noise & Just Look At The Price Charts

Many analysts in the business media are offering opinions about the decision by General Motors CEO Mary Barra to close plants and send workers to unemployment lines. President Trump's criticism of the actions makes for volatile daily price moves -- he'd campaigned on a promise to keep car plants such as these open. His "promises made, promises kept" slogan is a problem for any re-election bid with this announcement from GM.

What's it like if we skip all of the daily news headlines, media expert opinions, political shouting and just examine the price charts? Let's take a look.

Here's the General Motors daily chart:

You can make out clearly the down trend line connecting the lower and lower highs from the June peak through September. The stock gapped up from 33.5 to 37 at the end of October -- days before the announcement that General Motors would be closing plants and laying off workers. Perhaps it was clear to a few very perceptive investors that some kind of important news might be forthcoming.

After the news came out, the stock made it up to 39 before dropping off as President Trump expressed his dissatisfaction. If we just look at the daily chart, we might conclude that the down trend has at least temporarily ended -- with price above that line and above the Ichimoku cloud. The moving average convergence/divergence indicator (MACD) below the price chart is already suggesting a negative divergence.

The GM weekly chart tells a slightly different technical analysis story:

This stock had been trending upward since that August, 2015 low. The uptrend line connecting that low with the June, 2016 low and the March, 2018 low has been broken. Even with the recent blast higher, GM has been unable to overcome that line on a closing basis. It remains below the Ichimoku cloud as well.

For the longer-term perspective, here's the monthly chart:

Despite all of the headlines and all of the deep thoughts among political analysts, General Motors remains in an uptrend from the standpoint of the monthly price closes. You can see this at a glance: connecting the 2015 low with the 2016 and 2018 low shows how all of the action this year remains above the up trend line. GM is staying above the Ichimoku cloud range as well.

As long as we're talking about the car manufacturing business, I have noted on this blog that both Honda and Toyota might be considered "value" stocks if you applied basic Benjamin Graham style analysis. Here's a link to my blog note that mentions Honda and here's the link to the mention of Toyota. And then there's Tesla, speaking of cars being manufactured, but that's a whole different story.

Read the Original post here.

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