General Electric (GE) - Get General Electric Company Report has been in a tailspin lower since the middle of December. Prices gaped lower Friday and volume expanded. GE ended the day near its intra-day high.
Is this going to evolve into an exhaustion gap and the start of stability? Or is there more downside risk? Let's review the latest charts and indicators to see what strategy seems reasonable.
In this daily bar chart of GE, above, we can see how prices have behaved since December. There is a decline to around $29.50 where prices hold for three months. Rallies failed at the underside of the flat-to-declining 200-day moving average line. Prices break lower in May to near $27, followed by a rebound and failure at $29.50. The selloff accelerates in the latter half of June and in July a bounce fails at $27.
Support levels have become resistance areas. Prices are below the declining 50-day moving average line and the declining 200-day average. The On-Balance-Volume (OBV) line has been telling us that sellers are more aggressive for the past 12 months. Momentum is not (yet) diverging from the price action. We are are not getting any foreshadowing of a reversal.
In this weekly chart of GE, above, we can see prices below the declining 40-week moving average line. Prices tested older support in the $26-$23 area from late 2014 and early 2015. The weekly OBV line is also telling us that sellers of GE have been more aggressive for months. The weekly MACD oscillator is bearish. A cover shorts buy signal looks like it is a long way off.
In this Point and Figure chart of GE, above, we can see the price breakdown and the potential bearish target of $23.48.
Bottom line: I think it is too early to get bullish on GE, even though its yield might be attractive. GE is a huge "ship" and it will take a lot of basing and new accumulation to turn it around.
GE's shares rose 0.7% to $25.61 early Tuesday afternoon.
(This column originally appeared on Real Money on July 24, our premium site for active traders. Click here to get great columns like this from Bruce Kamich and other writers even earlier in the trading day.)
More of What's Trending on TheStreet
- Department Stores Are Dying -- Michael Kors Declares War on Coach With Big Jimmy Choo Deal
- Walmart Looks Like It's Beating Back This Ruthless German Grocery With Some Success
- Birchbox Revolutionized How We Buy Beauty Products
- Amazon Tumbling Almost 40% Is Not as Crazy as It Sounds
- Why IBM Should -- and Shouldn't -- Break Itself Up