General Electric (NYSE:GE) is scheduled to report its latest earnings on Friday, April 21, before the start of trading for the day. GE stock has largely trended higher over the years, but over the past 12 months, it looks to have traced out a potentially bearish-looking pattern on the charts.
Depending on how strong GE reacts (in either direction) following Friday’s report, this could signal the beginning of either a significant breakdown, or a new leg higher and a continuation of a multiyear trend.
The industrial sector (to which GE belongs) of the S&P 500 is higher by about 3.7% year-to-date. While that’s not significantly worse than the broader stock market, on the below ratio chart, we see that the relative underperformance has led to a pullback right after reaching horizontal resistance last December.
If industrial stocks like GE come alive again after their respective upcoming earnings reports, the relative strength should pick up again, too. That in turn would lead to a break higher and out of the year-to-date consolidation phase.
On the other hand, if industrial stocks like General Electric weaken further after earnings, this ratio chart could easily revisit its recent lows from last November.
But enough of the relative view. Let’s look at the actual charts of General Electric.
GE Stock Charts
First, from a multiyear perspective, we see that since coming out of the financial crisis in 2009, General Electric has largely traded higher in a well-defined uptrend.
The lower end of this uptrend currently also coincides with the blue 100-week simple moving average. That is to say, a break below the $29-$30 area would be a significant daily event.
On the daily chart, note that although GE stock remains in a bigger-picture uptrend, over the past 15 months or so, shares have developed a series of failed rallies that are visibly putting weight on the black diagonal support line.
Over the past couple of months, GE stock has done very little and keeps consolidating below its 100- and 200-day simple moving averages, which also act as important near- to possibly intermediate-term resistance.
If General Electric stock moves at least a couple percent in either direction after Friday’s earnings report, then one of two trades could set up.
A break and hold above $30.70 could set up a trade to the upside and ultimately back toward the upper end of the longer-standing trading channel in the mid- to high $30s. This would simply mean a continuation of the longer-standing trend.
A break and hold below $29 after earnings would break the aforementioned bigger uptrend and point toward price targets around $28 and $27.
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