GM stock day chart after Q1 earnings

Price dynamics reflecting GM investor reaction to Q1 earnings report

General Motors Company (NYSE: GM) announced first quarter earnings, but it is the market reaction to the news as in price dynamics that really counts for auto sector investors.

The official news release said that General Motors Company (NYSE: GM) announced net revenue in the first quarter of 2012 of $37.8 billion. Earnings before interest and tax (EBIT) adjusted was $2.2 billion.

Now comes the reaction of the market to the news, which, as of this morning, has GM stock still heading downward toward the past broken resistance level of 22.11. Will it hold? Your guess is as good as mine, as the next lower level is the major low of 19.00.

Will that level be tested? Will it hold if tested?

And that’s the point I always try to make. It is the market which decides support and resistance levels, and whether they will be tested, how many times, and whether they will hold of fall through. If you violate that understanding, then you are doomed to be surprised time and time again.

Just to give you a further clue, recall my report on the April sales report just a few days ago. Read: GM stock reaction to drop in April sales looks meaningless, awaiting earnings. and now that earnings are out, it appears the investors were reacting ahead of schedule; but it's hard to know for sure until it actually happens.

GM forward-looking statements surely seem to be a mixed bag, too. The company raised 2012 industry outlook from 13.5M-14M units to 14M-14.5M units. So, far so good. Then April sales do not appear to be a major concern, as GM knows it will get its share of the pie.

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