General Motors announced a $7.1 billion charge for the fourth quarter, with $6 billion related to electric vehicle operations. The announcement aligns with a pivotal moment on GM’s weekly chart, where the stock recently hit $85, meeting a multi-year resistance trendline known for halting price advances since 2017.
This resistance has thwarted progress before, marking failed attempts in 2018 and during 2020-2021. Currently, GM’s stock sits at $83.36 pre-market, and this charge could accelerate a decline towards the $66 level, which has served as a support point in the past.
The massive write-down follows a decrease in demand post the expiration of federal tax credits in September. This led GM to reduce production and settle costly contracts with suppliers. Notably, $4.2 billion of the charges are in cash, for settlements and cancellations. GM anticipates more charges by 2026, but expects them to be less severe.
The consistent presence of the ascending resistance trendline suggests a likely downturn when faced with such an adverse announcement. The $66 level is a logical downside target based on historical support and the current chart structure, indicating pressure on the stock.
We saw that massive $7.1 billion write-down from GM late last year hit the stock just as the charts suggested. The rejection from the $85 resistance level proved to be a powerful signal, pushing the stock down. Now, with the price consolidating around the $68 mark, we are watching to see if the key $66 support level holds.
The fundamental pressure on GM’s electric vehicle strategy seems to be continuing. Recent industry data for the fourth quarter of 2025 confirmed a slowdown, with U.S. EV market share slipping to 7.5%, down from over 9% earlier in the year. This demand problem that forced GM’s hand is not disappearing quickly.
Looking ahead, GM’s official earnings report for that fourth quarter is just a few weeks away, and we are seeing a rise in implied volatility. This means options are pricing in the potential for another sharp move in the stock. Traders should be prepared for this catalyst to either confirm the bearish trend or trigger a short-covering rally.
For those who believe more bad news is on the horizon, buying put options offers a direct way to bet on the stock breaking below that $66 support. A decisive break of that level, especially if earnings disappoint, could trigger another leg down toward lows we haven’t seen since 2024. Using put spreads can be a way to lower the cost of this trade given the rising volatility.
On the other hand, much of the negative sentiment from last year may already be priced in. If management provides a surprisingly confident outlook for 2026, we could see a powerful squeeze, making short-dated call options attractive for a speculative bounce. Selling premium through strategies like iron condors could also be considered to profit from a drop in volatility after the earnings announcement.
