Price Forecast:

Bullish Case: A gradual recovery in market conditions, combined with GM's strategic focus on EV growth and anticipated resolution of labor disputes, suggests potential upside for stock prices, forecasting gains in the coming quarters.

Bearish Case: Continued financial challenges in China, high labor costs, and risks from proposed tariffs under a new administration may negatively impact GM's profitability and stock performance, leading to potential downturns.

Potential Outcomes:

1. 40% chance GM's EV strategy re-establishes momentum, yielding solid price increases by mid-2025.
2. 25% chance negative market sentiment persists, contributing to a gradual price decline.
3. 20% chance legislative changes abruptly increase production costs, adversely affecting profitability.
4. 15% chance operational efficiencies reduce costs, enabling minor price recovery.

Trading Oracle: Adopt a bullish strategy via debit spreads on GM options. Consider buying calls with strike prices around $55 and selling higher strikes at $57. This captures potential upside with controlled risk, capitalizing on improving sentiment and low implied volatility now trending higher after recent competition shifts. Aim for a horizon beyond January to navigate any earnings announcements.

December 10, 2024