General Motors Flashes A Bullish Signal Heading Into Q4 Earnings: Charting The Upcoming Reaction

General Motors Company GM was trading 2.64% higher at one point on Tuesday heading into the automaker's fourth-quarter earnings report, which is expected after the bell.

When the legacy-turning-electric vehicle manufacturer printed its third-quarter earnings beat on Oct. 27, 2021, the stock suffered a bearish reaction and closed the trading session down 5.42%.

For the third-quarter, General Motors reported sales of $26.78 billion, beating the analyst consensus of $26.65 billion and EPS of $1.52, which beat the estimate of 96 cents.

For the full-year outlook, General Motors raised its guidance to the high end and said it expects earnings to come in between $11.5 to $13.5 with an adjusted EPS of $5.70 - $6.70.

• The General Motors chart flashed a signal on Tuesday that a reversal to the upside may be in the cards, after a steep downtrend from its Jan. 5 all-time-high of $67.21. The stock has since traded down to a Jan. 28 low of $49.24. It should be noted, however, that holding stock or options over an earnings print can be likened to gambling because stocks can soar on an earnings miss and drop on a beat.

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The General Motors Chart: On Tuesday, General Motors shot up above a Jan. 26 lower high of $53.99, which provided the first indication the downtrend may be over. For the trend change to the upside to be confirmed, General Motors will need to print a higher low above the Jan. 28 low-of-day price.

The price action also caused General Motors to regain support of the eight-day exponential moving average (EMA), which indicates the short-term sentiment is turning bullish. The stock’s next course of action will be to regain the 21-day EMA as support, which could eventually cause the eight-day EMA to cross above the 21-day EMA.

The bounce up higher on Monday and Tuesday allowed General Motors to bring its relative strength index up to a healthier 41% level, and the oscillator is now trending upwards, which is another positive sign for the bulls. The RSI indicator, like the stock, will also eventually need to print a higher low.

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• Bulls want to see a bullish reaction to General Motors’ earnings propelling the stock to regain the 21-day EMA, which will push it up over a resistance level at $54.50 or for a bearish reaction that only pushes the stock down to print a higher low. There is resistance above at $56.13 and $59.33.
• Bears want to see a bearish reaction to the earnings report dropping General Motors down to create a lower low, which will confirm the stock is still trading in a fairly consistent downtrend. There is support at $52.18 and $50.07.
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