General Motors Company (NYSE:GM) Making a V-Shaped Recovery
The US auto market is back on track as fast as it fell, making the V-shaped recovery real
General Motors
Ticker: NYSE:GM
Price: $26.59
New vehicle sales and used vehicle prices are recovering in May and June almost as fast as they declined in March and April, according to JPMorgan. “We didn’t call it, nor did we expect it, but numerous data points all suggest the US auto industry is in the midst of a once fabled but clearly no longer mythical ‘V-shaped recovery,’” JPMorgan’s sector analyst wrote in a report.
That rebound prompted JPMorgan to raise its Y 2020 US light vehicle seasonally adjusted annual sales rate (SAAR) by 1-M, to 14.5-M. The figure is way above estimates from IHS Automotive of 13.2-M, also pushed JPMorgan to raise EPS estimates for automakers and suppliers, and led to higher price targets for Tesla, General Motors, and Ferrari.
Business Summary
General Motors Co designs, builds and sells trucks, crossovers, cars and automobile parts worldwide.
The Company also provides automotive financing services through General Motors Financial Company, Inc. (GM Financial).
GM North America (GMNA) and GM International (GMI) are its automotive segments. GMNA and GMI are meeting the demands of customers with vehicles developed, manufactured and/or marketed under the Buick, Cadillac, Chevrolet and GMC and Holden brands.
Its brands offer luxury cars, crossovers, sport utility vehicles (SUVs) and sedans.
The Company’s Car-and Ride-Sharing Maven is a shared vehicle marketplace. Through its subsidiary, OnStar, LLC (OnStar), it provides connected safety, security and mobility solutions for retail and fleet customers.
GM Cruise is its global segment engaged in the development and commercialization of autonomous vehicle technology.
Shayne Heffernan Trade Idea
“Our current price target of General Motors will come in around $35.82 which will give the stock a price increase of +34.71%.”
Price Performance
Relative Valuation
Technical Indicators
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 27.08.
The projected upper bound is: 29.58.
The projected lower bound is: 23.74.
The projected closing price is: 26.66.
Candlesticks
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 21 white candles and 29 black candles for a net of 8 black candles.
An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend. It then signifies that the momentum may be shifting from the bulls to the bears.
If the engulfing bearish pattern occurs during a downtrend (which appears to be the case with GENERAL MOTORS), it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.
Momentum Indicators
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
Stochastic Oscillator
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 19.6643. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 4 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 49.15. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 8 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -89. This is not a topping or bottoming area. The last signal was a sell 8 period(s) ago.
MACD
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 6 period(s) ago.
Rex Takasugi – TD Profile
GENERAL MOTORS closed down -0.500 at 26.590. Volume was 263% above average (trending) and Bollinger Bands were 35% narrower than normal.
Open High Low Close Volume 27.720 27.750 26.340 26.590 14,368,917
Technical Outlook Short Term: Oversold Intermediate Term: Bullish Long Term: Bearish
Moving Averages: 10-period 50-period 200-period Close: 28.01 24.70 31.30 Volatility: 62 76 75 Volume: 4,336,913 3,439,115 3,062,543
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
Summary
GENERAL MOTORS is currently 15.0% below its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods.
Our volume indicators reflect volume flowing into and out of GM.N at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on GM.N and have had this outlook for the last 47 periods. our momentum oscillator has set a new 14-period low while the security price has not. This is a bearish divergence.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of the NYSE Stock Market.
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Sources:
General Motors Company Website
Thomson Reuters Metastock and Eikon financial tools
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