General Motors Pulls Back

General Motors has been in the fast lane since the fourth quarter began. It’s now having its steepest pullback of the rally, offering momentum investors a potential opportunity.

The first feature on GM’s chart is yesterday’s hammer candlestick. Sellers tried to push the shares below $41 but weren’t able to keep it there.

Second, that $41 level is potentially important because it’s near the daily closing highs in July 2019.

Next, GM’s stochastic oscillator recently fell to its lowest level since August 2019. That may suggest a deeply oversold condition.

The automaker’s fundamentals have also improved – in both the near term and longer term. In the near-term, GM has gotten a huge margin boost from SUVs and pickups. Last quarter, for instance, revenue barely beat estimates but profits were almost double consensus.

Over the longer term, CEO Mary Barra is pushing GM toward electric vehicles with the development of its Ultium drivetrain. That could lift valuations because GM trades for less than 1 times revenue. In comparison, Tesla trades for more than 20 times revenue.

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