29Nov9:54 amEST

Holiday Season Buyback Panacea for General Motors

A panacea for GM...or so it seems.

Shares of downtrodden General Motors are rocket-shipping more than 10% off the open, as the firm announced a $10 billion buyback, boosted its dividend, and reinstated 2023 guidance after the UAW strikes. 

While it sure seems like this is the silver bullet for a lowly stock, I beg to differ. 

On the zoomed-out and updated daily timeframe for GM, below, we can see this sizable opening gap. That said, the gap takes price more or less back to the breakdown scene from October, where GM lost the key $31/$32 level after several quarters of it holding as firm support. 

In fact, if you take a look at longer-term timeframes, this level actually has significance dating back to 2010 (!). 

Going forward, if we do not have any fireworks before New Year's Eve, I am looking for this level to inflict resistance into 2024 for GM as I do not believe any of the measures the firm has taken will compensate for the many headwinds facing the company, consumers, and the economy in general.

Technically, this $31/$32 area is an excellent reference point against which to trade, which means rejection by price here sets up a high probability short trade into next year. 

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