Summary:

  • General Motors (GM) rose Friday morning, trading 8% higher after raising guidance.
  • After slipping from its highs, we believe the stock is now building a base.

Management raised its guidance for this year’s earnings to $6.50-7.00 per share, which was above the average forecast amongst Wall Street analysts of of $5.92.

CEO Mary Barra explained that, “Our focus is on capitalizing on the new trucks we have out there, and also on cost reduction.” She also highlighted plans to expand its reach in China and roll out Cadillac as its flagship electric vehicle brand.

Our analysis is that the stock is building a base. We expect lower price action in the short term and higher prices in the intermediate term. In analyzing the market cycles for GM, we can see the stock is approaching the declining phase of its current cycle.

In the near term, we expect a pullback to around $35 by Feb. Beyond that, we see a more favorable period, with upside potential of around $40 by the spring.

For more from Slim, or to learn about cycle analysis, check out the askSlim Market Week show every Friday on our YouTube channel.