Can GE Get Up Off the Mat?

GE has moved lower in this decline within a well-defined downtrend channel. Recently, the stock accelerated out of the channel to the downside, as traders panicked. On Thursday, we saw a downside blow-off and recovery which formed a bullish reversal bar in the daily chart. This type of reversal bar suggests to us that the downside pressure has been "met" by the bulls.

Also, the stock has also shown several bullish momentum divergences. Momentum divergences show a waning of bearish energy and provide a permissive backdrop for a rally. We would expect to see a rally develop from this level in coming days which should develop in to a counter-trend rally within the context of a long-term bear market.

A move across the trend channel for GE would put a target price of $25 on the rally. That is a significant rally from the current price of $16.12. Trader could place a stop-loss on the trade at $14.50. A break of Thursday's lows would nullify the bullish implications of the signal.

Know What You Own: Competitors of GE inlcude Citigroup (C - commentary - Cramer's Take) , Phillips (PHG - commentary - Cramer's Take) , Siemens (SI - commentary - Cramer's Take) , United Technologies (UTX - commentary - Cramer's Take), 3M (MMM - commentary - Cramer's Take) and Danaher (DHR - commentary - Cramer's Take) .

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At the time of publication, John Hughes and Scott Maragioglio had no positions in the stocks mentioned. Hughes and Maragioglio co-founded Epiphany Equity Research, which has developed and utilizes proprietary tools to identify and track liquidity changes in the market indices and sectors. Hughes advises numerous asset managers, hedge funds and institutions managing in excess of $30 billion. Maragioglio is a member of the market technicians association (MTA) as well as The American Association of Professional Technical Analysts (AAPTA) and holds a Chartered Market Technician (CMT) designation. Maragioglio has also served on the board of directors of the AAPTA.