General Motors Rallies to All-Time High

General Motors Co. (GM) is trading at an all-time high in Thursday’s pre-market after China reported that automobile sales increased over 300% in February. The news eased concerns about reduced revenue as a result of worldwide chip shortages that have forced some manufacturers to close down assembly lines. The rally is set to confirm a breakout above a 10-year trendline, potentially setting the stage for even more prolific gains in coming months.

Investors Shake Off Bearish Guidance

The stock sold off in February despite beating Q4 2020 top and bottom line estimates. A 2021 profit warning fueled the downside, with the manufacturer warning that chip shortages would lower earnings-per-share (EPS) by at least 14%. Investors have now discounted the bearish guidance, buoyed by Biden administration intervention, the rapidly improving economic outlook, and growing cooperation with China on the semiconductor supply chain.

GM benefited from Tesla Inc.’s (TSLA) historic 2020 share gains, with a new generation of investors raising industry valuations in reaction to the accelerating transition into electric vehicles. CEO Mary Barra has responded to the challenge better than her predecessors, committing billions of dollars to establish thehighest EV market share in North America with 30 fully-electric vehicles in production by 2025.

Wall Street and Technical Outlook

Wall Street consensus continues to brighten, with a ‘Buy’ rating now based upon 17 ‘Buy’, 1 ‘Overweight’, and 2 ‘Hold’ recommendations. No analysts are recommending that shareholders close positions and move to the sidelines. Price targets currently range from a low of $50 to a Street-high $85 while the stock is set to open Thursday’s session about $8 below the median $65 target. Given the potential breakout, this is a perfect setup for a rapid advance into the mid-60s.

The stock carved three nominally higher highs after coming public in 2010, generating rising trendline resistance in the 40s. It finally broke out in January 2021, lifting to 57 and pulling back into an extended test of new support. It bounced at that level three times into early March and turned higher, posting an all-time high in Thursday’s pre-market. If sustained, this price action will confirm the breakout, raising odds for another strong rally wave.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.