Back in August 2000, GE traded as high as $60.50, bringing good things to light as an extremely diversified industrial company.
During the credit crisis, GE's exposures to the financial markets through GE Capital, put the company under the scrutiny of being a systemically important company, and the company suffered along with large regional banks.
When you look at the weekly chart below you will see GE shares are well below its October 2007 high of $42.15. Keep in mind the S&P 500 I:GSPC is setting new highs almost daily. The S&P is 37.6% above its October 2007 high, while GE is 22% below its October 2007 high.
Once GE decided to exit GE Capital, investors began to take notice. Of note on its daily chart is the price gap higher on Oct. 5, 2015 when the stock gapped above its 200-day simple moving average as activist investor Nelson Peltz took a $2.5 billion stake in the company.
General Electric is a component of the Dow Jones Industrial AverageI:DJI . The stock is up 13% from its June 27 Brexit low of $29.17 versus the gain of 9% for the Dow 30. GE has a dividend yield of 2.92% versus the yield of 1.58% for the 10-Year U.S. treasury note. The stock has an elevated price-to-earnings of 44.4 versus 19.6 for the Dow 30.
Analysts expect General Electric to earn 46 cents a share when it reports before the opening bell on Friday.
Here's the daily chart for General Electric.
Courtesy of MetaStock Xenith
GE closed Wednesday at $32.78 up 5.2% year to date and set a multiyear high of $33.00 the same day. The stock has a solid gain of 21% since the Feb. 11 low of $27.10.
The daily chart shows that price gap above its 200-day simple moving average on Oct. 5 when the average was $25.82. The stock has been above a "golden cross" since Oct. 29 when the 50-day simple moving average moved above the 200-day simple moving average. The stock closed that day at $29.34 and this technical signal indicates that higher prices lied ahead.
The "golden cross" buy signal also justifies the strategy off buying weakness to the 200-day SMA which occurred on Jan. 20 when the average was $27.56, then on Feb. 11 was the average was $27.68 and on June 27 when the average was $29.50.
Here's the weekly chart for General Electric.
Courtesy of MetaStock Xenith
The weekly chart shows a red line through the price bars, which is the key weekly moving average (a 5-week modified moving average). The green line is the 200-week simple moving average considered the "reversion to the mean." The study in red along the bottom of the chart is weekly momentum (a 12x3x3 weekly slow stochastic), which scales between 00.00 and 100.00, where readings above 80.00 indicates overbought and readings below 20.00 indicates oversold. A negative weekly chart shows the stock below its key weekly moving average with weekly momentum declining below 80.00 in a trend towards 20.00.
The weekly chart for GE is positive with the stock above its key weekly moving average of $31.51 and well above its 200-week simple moving average of $26.03. The weekly momentum reading is projected to rise to 77.90 this week up from 68.45 on July 15.
The Fibonacci retracement levels cover the crash of 2008 when the stock plunged from $42.15 to $5.73 at the March 2009 low. Shares have been above the 61.8% retracement of $28.22 since the week of Feb. 23.
Investors looking to buy GE should consider doing so on weakness to $30.03, which is a key level on technical charts until the end of September.
Investors looking to reduce holdings should consider selling strength to $33.48, which is a key level on technical charts until the end of 2016.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.