Another sell-off in General Electric (GE) could be lurking. 

Shares have shed nearly 11% of their market value since the start of the calendar year, which means that this blue chip stalwart is actually under-performing the rest of the S&P 500 by a huge margin.

Trouble is, shares look ready to kick off another leg of selling this summer.

GE has spent the last month forming a textbook example of a descending triangle pattern, a bearish continuation setup that's formed by horizontal support down below shares at $27.25, and downtrending resistance to the top-side. Basically, as GE bounces between those two chart lines, shares have been getting squeezed closer and closer to breakdown territory. Once shares violate $27.25 materially, GE opens up a lot more downside risk.

One of the most important technical indicators in this market is relative strength, the line down at the bottom of GE's price chart. Relative strength has been making lower highs in GE since late last fall, indicating that the under-performance continues.

As long as that's the case, it makes sense to avoid shares of GE.

Source: TheStreet
Source: TheStreet

General Electric is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells GE? Learn more now.

Editor's Pick: Originally published June 5.

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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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