Let's lift the hood on $GM (General Motors Company: NYSE) and see what this stock has been up to over the past few months:
As the daily chart shows us, the bulls have dominated the price action since early February; +DMI has remained above -DMI for nearly two months, but we're starting to see the spread between these two indicators diminish. What awaits remains to be seen.
Here we are at a fork in the road. The $39 level is resistance and the $38 level is near term support. Below $38, the $35.50 - $36 level would be another key support area to watch for.
Short-term and intermediate-term moving averages are beginning to converge, per the MACD signal. Coupled with a declining RSI signal, any pick up in bearish momentum could put pressure on $GM in the days ahead, assuming the bulls are unable to overcome the $39 level above.
On Monday, $GM closed at $38.59, just a penny above its 5 DMA currently at $38.58. The open price was $38.81 and high for the day was $39, so the bulls lost traction as the trading day neared its end. If the RSI signal falls below 60, this would generally be seen as bearish.
If the price action continues to exhibit overall weakness, and the short-term moving averages cross below the intermediate-term moving average, this would further support the bearish case. A spike in -DMI and subsequent cross and hold above +DMI would further validate the bearish stance; a rising ADX line in such a scenario would portend a trending move lower.