General Motors raced higher on Monday as investors applauded major restructuring plans that could save the automaker billions a year. Its stock surged more than 5 percent, hitting levels not seen since the summer.
Ari Wald, head of technical analysis at Oppenheimer, says it can rally further if it can break its key resistance level at $39.
"We came right into this today," Wald said on CNBC's "Trading Nation" on Monday. "Why is this important? This was the gap in the stock dating back to over the summer, in July. Typically, you'll fill the gap, they'll act as resistance on the way back up, and the stock has done a pretty good job of respecting these gaps."
Monday's surge put its stock just shy of $39, a level it has not broken since its July sell-off. It needs to rally another 3 percent to recapture that level.
GM has also found a level of support at around $34, says Wald. That level has acted as a bottom for the stock since it bounced back above $35 at the beginning of the month.
Gina Sanchez, CEO of Chantico Global, says GM's restructuring plans could give the company legs to weather any flagging auto demand down the road.
"The business model has been broken, and I do think this is a very bold move for GM," Sanchez said on "Trading Nation" on Monday. "They're just sort of looking forward and saying if we're going to make a shift we're going to have to make a big one and in order to do that we need to figure out how to raise that cash, and so I think that this could be a very interesting move for GM."
The Detroit automaker announced on Monday plans to shutter production at five plants in North America and eliminate 15 percent of salaried workers, a reorganization that could save the company $6 billion a year by the end of 2020.
However, it also could put GM in political hot water with a White House that has championed U.S. manufacturing job growth.
"That is a challenge. Obviously when you lay people off, it's a very unpopular decision and especially right now we're looking at an economy that is probably peaking," said Sanchez. "If anything, the administration is trying to figure out ways to sort of continue the party, and this is not going to help."
President Donald Trump said Monday that he had spoken with GM CEO Mary Barra and urged her to open a new plant in Ohio to replace the one that is expected to close. Barra is meeting with top White House economic advisor Larry Kudlow at the White House on Monday.
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