Depending on what kind of chart you look at, you can get a different "read" on General Motors (GM) . The daily chart looks bearish. The weekly chart is mixed and the Point and Figure chart is potentially bullish. What is a humble analyst to do?
Let's check each chart, present our findings and let you decide. Tweet or email us your opinion.
In this daily bar chart of GM, above, we can see prices are in an uptrend, but GM has not made a new high since early March. Prices are below the declining 50-day simple moving average line. The automaker has been testing the rising 200-day moving average line for much of April and it is still touch-and-go on whether the line will hold. The daily On-Balance-Volume (OBV) line has moved up and down with the price action the past 12 months. The OBV line is inching up slightly, suggesting that some buyers are becoming more aggressive.
In the lower panel, we can see a bullish divergence between the higher momentum reading since late March and the lower prices seen on the stock. This divergence is not big but it could be enough to get GM to rally in May.
In this weekly chart of of GM, above, we can see prices are testing the rising 40-week moving average line. It is hard to tell if GM will hold above the line or fail. The weekly OBV line has been weakening the past three to four months and suggests sellers of GM have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator has crossed to a take-profits sell signal.
In this Point and Figure chart of GM, above, we can see a breakout at $37 but prices have reversed to the downside with a column of O's. This chart shows a large band of support below the market but it also shows that we need a trade at $39 to re-establish the bull trend.
Bottom line: I usually have no problem squeezing the trigger (and controlling my breathing), but I honestly don't know whether we should be in drive, neutral or reverse. Let's check in with GM in a few weeks.
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