General Electric (GE) shares saw a strong bounce off their August 2015 low and this year began a more measured advance, making a series of higher highs and higher lows on the weekly chart, forming a channel pattern above the rising 40-week moving average.
But the stock failed at its last test of channel support. Now it looks to be going through a trend transition and is likely headed lower.
Jim Cramer, TheStreet's founder and manager of the Action Alerts PLUS portfolio, wrote about GE in his weekly roundup with Jack Mohr on Action Alerts PLUS stocks. "Shares traded lower this week along with the broader market and the industrial sector. Unfortunately, the broader decline throughout the week overshadowed the company's savvy move to merge its oil and gas business with Baker Hughes (BHI) ," they commented Friday. Cramer has a $35 long-term price target on the stock, which closed at $28.44 on Friday.
During the nearly one-year advance that formed the channel, moving average convergence/divergence was tracking lower in bearish divergence to the stock price. In August this year, the Chaikin money flow indicator moved into negative territory.
The July retest of channel resistance proved to be the last of the higher highs, with the stock pulling back and breaking through channel support and the 200-day average in September.