General Motors Company shares fell more than 3% on Friday, just one day after the company reported a 1% January year-over-year sales increase, powered by strong Buick and GMC results. A possible gas tax increase and continued anxiety about NAFTA’s future contributed to the decline, which dropped the stock to a seven-week low. Traders should look for sellers to prevail into the company’s Feb. 6 earnings report, although GM preannounced at the high end of expectations on Jan. 16 while forecasting 2018 results in line with current consensus.
GM is sharply outperforming rival Ford Motor Company , which reported an ugly 6% year-over-year January decline, continuing a string of bearish news that has dropped the stock more than 20% since it topped out at a 52-week high above $13 in mid-January. Ford stock is currently testing two-year support near $10.50 and could break down in the coming weeks, entering its first major downtrend since 2012.
U.S. auto industry sales fell 2% in 2017, failing to overcome heathy comps driven by a multi-year expansion. Rapidly rising interest rates are expected to cut into 2018 results, compounded by a growing inventory of late model used automobiles. Taken together, it is possible that the sector has already passed a cyclical peak, setting the stage for several years of contracting sales and lower stock prices. (See also: How the U.S. Automobile Industry Has Changed.)
GM and Ford shares are getting sold, with a perfect storm of economic and industry headwinds contributing to downside pressure. …read more
Read more here: General Motors Stock Could Fail Multi-Year Breakout
Category: GM, F