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S&P500 closes in on 200 DMA; GM beats forecasts

2:55 PM February 6, 2019

Summary:

  • US stocks look to post YTD highs for 6th session in a row

  • S&P500 moves back near the 200 day SMA

  • GM shares called to open higher after earnings beat

 

The recent rally in stocks across the Atlantic has shown little sign of letting up and whilst there remains several reasons to doubt its ability to persist, the path of least resistance appears to remain higher until the price action tells us otherwise. The S&P500 (US500 on xStation) has now posted higher highs and higher lows for the past 5 sessions and is well set to extend this run if it can move above 2737 and not drop below 2717.

The US500 is looking to extend its winning streak today with the market closing in on the 200 day SMA from below at 2745. This could be seen as a significant level for the long-term trend of the market. Source: xStation

 

The market is now up by around 17% from the low seen over the festive period and the size of the rally has caught some off guard. Even though there’s been a perceived shift in the Fed’s stance, the root cause of the declines in the final quarter of 2018 remain with US and Chinese trade tensions still threatening to put the brakes on an already slowing global economy. Price is now back within striking distance of the 200 day SMA at 2745 and this could be seen as an important level to watch above. If price can make a break above here then the outlook becomes even more favourable but unless that happens then according to this indicator at least, the market remains in a longer-term downtrend.  

 

One stock to watch on the open this afternoon is General Motors (GM), after the carmaker announced better than expected figures for both the top and bottom line. For the last quarter adjusted earnings per share came in at $1.43 vs $1.22 expected, generated by revenue of $38.4B vs $36.5B according to the consensus forecast.  “Results were driven by strong pricing, surging crossover sales, successful execution of the company’s full-size truck launch, growth of GM Financial earnings and disciplined cost control,” the company said in a statement. GM is currently embarking on a cost cutting programme that the firm believes will save about $6B by 2020, with 14,000 jobs set to go. Shares are called to open higher by a little over 4% on this afternoon’s opening bell.

GM shares are called to open around the 61.8% fib of the larger decline near 40.60 this afternoon, after a positive earnings update from the carmaker. Source: xStation

 

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