General Motors (GM) has reported a $7.1 billion loss for the fourth quarter, with $6 billion linked to its electric vehicle (EV) business. This news comes at a critical point for GM’s stock. Recently, it reached $85, a level that has acted as a barrier since 2017. This resistance has prevented further gains in the past, with failed attempts in 2018 and between 2020-2021. Currently, GM’s stock is at $83.36 before the market opens. This write-down could push the stock down towards $66, a level that has previously supported prices. The large loss follows a drop in demand after federal tax credits ended in September. This situation forced GM to cut production and renegotiate pricey contracts with suppliers. Of the total charges, $4.2 billion is cash meant for settlements and cancellations. GM expects more losses by 2026, but they anticipate these will be smaller. The upward resistance trendline suggests that GM may experience a downturn after this negative announcement. The $66 level is a reasonable target for a decline, based on past support and the current chart. The $7.1 billion write-down from GM last year impacted the stock as the charts predicted. The stock’s failure to break past $85 was a strong sign, resulting in a drop. Now, with the price around $68, we will see if it holds at the crucial $66 support level. GM’s electric vehicle strategy faces ongoing challenges. Recent industry reports show that the U.S. EV market share dropped to 7.5% in the fourth quarter of 2025, down from over 9% earlier in the same year. This demand issue that forced GM’s decisions is not likely to resolve quickly. Looking ahead, GM’s official earnings report for the fourth quarter will be out in a few weeks, and we’re noticing an increase in implied volatility. This implies that options traders expect significant price swings. Investors should be prepared for this catalyst, which could either reinforce the bearish trend or spark a short-covering rally. For those expecting further bad news, buying put options is a straightforward way to bet against the stock dropping below the $66 support. A clear break below this level, especially if earnings fall short, could lead to a decline not seen since 2024. Using put spreads can help reduce the trade’s cost in light of rising volatility. Conversely, some negativity from last year may already be factored into the stock price. If management shares an unexpectedly positive outlook for 2026, we could see a rapid increase in prices, making short-term call options appealing for a speculative rebound. Additionally, strategies like iron condors could be employed to profit from a decrease in volatility post-earnings announcement.

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