Ahead of Friday morning's earnings report, General Electric (GE) - Get Report is extending its pullback from December's high. On Thursday, General Electric is working on its fifth straight decline as it begins to put some distance on key support near the November high. This weak action has left the stock in a vulnerable position ahead of Friday morning's news.
In early November, GE successfully retested its October lows before mounting a powerful rally. Even before the big post-election ramp, the stock had already rebounded nicely off the $28.30 area. By mid-December, the rally had stretched to nearly 15% before stalling just below major resistance at the July 22 breakdown gap. GE immediately began to pull back from this key area and has continued this phase as earnings approached.
For patient GE investors, further post-earnings weakness would provide a low-risk entry opportunity. A drop down to the $30.60 area would retest the December low as well as a flatlining 200-day moving average. Also in this zone is the one-third retracement point of the powerful rally off the November low.
This article is commentary by an independent contributor. At the time of publication, the author was long GE.