General Electric Lighting It Up

By | May 23, 2015

General Electric (GE) shares have underperformed relative to the S&P 500 index for the last three years. Year-to-date, however, GE is lighting it up with a 10.5% return on investment compared to a 3.2% return in the index.

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The long term chart shows the drop that followed the dot-com bubble, followed by a return to the 2007 high, which happened to be 62% Fibonacci retracement of the 2000 and 2003 range. The 2008 crash delivered a greater percentage loss that the previous decline but the stock climbed back off its 2009 low, and in 2013 broke above the downtrend line drawn off the 2000 and 2007 highs. Since then, however, it has been moving in a horizontal channel bordered by the 50% and 62% retracement levels of the 2001 and 2009 range. That is, until last month, when the stock gapped higher and broke above the channel top.

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After punching through that resistance it pulled back and retested the $26.50 area, and in the process, formed a smaller secondary channel. Secondary channel resistance was penetrated this week. The 50 day moving average has crossed above the 200 day, and price and money flow momentum indicators are all trending higher and above their centerlines.
Well defined price action is healthy price action, and the stock looks like it wants to continue higher.

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