General Electric (GE) — Following Friday’s earnings announcement, the stock broke past a multi-month resistance area to a new year-to-date high.
On the multi-year chart, two things stand out.
First, while not quite there yet, the stock is slowly but surely moving toward a major resistance area closer to the $27 mark, which is where the downtrend line off the 2000 top comes into play. Given how long this downtrend has been in the making, we must give the resistance area some breathing room. Thus, I am circling $26.90 to $28 as the next major resistance area, which would also coincide with the 61.8% Fibonacci retracement level from the October 2007 highs down to the early 2009 lows.
Second, the majority of the rally off the 2009 lows took place within the confines of an orderly uptrending channel, the top of which the stock has again reached, or if we squint, overshot, on Friday.
On the daily chart, it is noteworthy that while orderly in its ascent, GE has rallied roughly 38% since the summer of 2012. The question now becomes one of timing.
While the recent breakout to new year-to-date highs could run for another couple of days, I think it’s unlikely the stock will move toward the $26.90 to $28 area in a straight shot.
What would be more in line with the way this stock tends to act would be a re-test of the recent breakout area near the $24 mark, and in an overshooting scenario toward $23, which could offer better entry levels for those looking to trade the stock up to the aforementioned resistance levels.