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Why GM Stock Turned Mixed in the 2nd Week of January 2018

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GM stock in January 2018

In the week ended in January, General Motors stock (GM) settled at $44.07 with minor gains of ~0.1% from the previous week’s closing price. In the first week of January, the stock rose 7.4%. In 2017, GM traded on a positive note and ended the year with gains of about 17.7% compared to a 19.4% rise seen in the S&P 500 Index (SPY) (SPX-INDEX).

According to US auto sales data for 2017, GM continued to be the largest auto company (IYK) in the country ahead of other companies including Toyota (TM), Fiat Chrysler (FCAU), and Ford (F).

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Weak December US sales

In December 2017, General Motors’ home market sales fell 3.3% YoY (year-over-year) to 308,539 units. The company continued to cut its vehicle deliveries to daily rental car companies, which drove its fleet sales down 22% last month. At the same time, GM’s US market retail sales remained firm at 254,449 vehicle units in December, up 1.8% YoY. Uncertainties about 2018 US auto sales could be the primary reason why GM stock traded on a mixed note last week.

In the last few quarters, GM has reported improvements in profitability despite a slowdown in US auto demand. The company’s key focus on profitable retail sales has helped it to see higher profit margins lately.

Technical levels

Last week, GM stock tested an important support level near its 50-day SMA (simple moving average) at $42.80, which should continue to act as an immediate support area this week.

On the upside, an immediate resistance level lies between a range of $44.30 to $44.50 followed by a key resistance near $45.05. The 14-day RSI (relative strength index) indicator was above the line of equilibrium near 58.9, suggesting minor strength in underlying momentum.

Continue to the next part where we’ll see how Ford stock traded last week.

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