I’m not sure what makes the rally more impressive. The fact that GE rallied 10.6% on a Federal Reserve day that caused selling pressure in the overall market or that shares gapped higher on Thursday and now have risen more than 5% in the face of more selling pressure in the overall market.
Positive commentary from its CEO certainty helps.
Either way, the price action in General Electric has been decisively bullish. That’s not something bulls have been used to.
Just earlier this week, shares were trading back down to the March lows. Although the overall market has been wavering over the past few weeks, the indices are up considerably from the lows.
That relative weakness vs. the overall market also makes GE a bit tougher to trade. Perhaps if Boeing (BA) - Get Report and the airlines can garner some momentum, maybe the run in General Electric can gain momentum, too.
Trading GE Stock
Wednesday’s rally was GE’s highest-volume trading session of 2020. That’s a bit of good news for bulls wondering about the legitimacy of this rally.
In any regard, the move also thrust General Electric stock above the 20-day and 50-day moving averages, as well as multi-month downtrend resistance (blue line).
The $6 level held as support, which was more or less the lows from March. That mark also held as support in July, although it did falter in May. That’s when shares flushed down to $5.50 and hammered out a bottom over the course of three consecutive days, all of which registered a low of $5.47.
That would have been the downside target had $6 failed as support. Instead, GE put together a powerful rally on strong volume. On the downside, the area that it just cleared — the 20-day and 50-day moving averages and downtrend resistance — need to hold as support.
A break of these levels could put $6 back on the table.
On the upside, let’s see if GE stock can get to $7.30, where it will find the 23.6% retracement. Above that opens the door to gains above $8. Specifically, GE could rally up to the 200-day moving average, the 38.2% retracement and the June highs.
Conveniently, all three of these levels come into play around $8.25 to $8.50, at this time.
Downside support must hold for longs to stay in, but if GE remains above these key marks, bulls have a reason to stay long and fish for some upside.