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Seasonal Stock Setup: Auto Group Revving Higher

by | Oct 7, 2021

General Motors (GM) – The automakers have seen nice  relative strength as of late with key stocks like TSLA, GM, and F trending higher throughout September when the market overall was weaker. GM specifically looks poised for a continuation rally now as it breaks above its YTD VPOC at 55. General Motors has a strong seasonal tendency to rally into Q4 with October seeing upside in 70% of the prior 10 years and an average return of +8.28% for the month. November has been higher 8 of the last 10 years with an average return of +3.79%. The trend recently turned bullish after the 8/21 EMA crossed higher and the stock cleared above 200 EMA. GM has been focusing on the future of Electric Vehicles in their business as a way to keep up with Tesla. This week the company stated it plans to take leadership in domestic EV Sales, surpassing Tesla, a lofty goal. GM says it will debut a new entry-point electric car priced at $30,000. Now with the stock breaking above key levels from its summer time correction off highs there is potential to revisit those highs at 64 into year end. GM was up about 7.5% during September and starting off October on the same foot. Looking to buy dips to the uptrending 8 and 21 EMA is a way to participate in the seasonally stronger period for GM. The stock has seen some recent bullish options flows including this week on 10/5 a buyer of 1000 November $25 ITM calls bought for $29.55 to $29.60.

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