Shares of industrial giant General Electric (NYSE:GE) have been acting well lately, both in relative and absolute terms. However, the company still has plenty of headwinds to overcome, and this is helping set GE stock up for a promising trade.
Before looking at the charts of General Electric stock let’s clarify that this is not an outright long-term bullish call on the company or its stock but rather a pure “trade” idea for the near term of a few weeks to months.
GE has had plenty of issues over the past few years and GE stock has seen its fair share of investor exodus, particularly after cutting its dividend in 2018. However, from an active investing and trading perspective, money at the margin is made by separating the near term from the longer term time frames, which is what this trade idea is all about.
GE Stock Charts
On the multi-year weekly chart, we see that GE stock had a miserable 2017 and 2018 where it barely came up for breath on its dive lower. By December 2018, however, the stock had matched its 2009 nadir and began to act much more constructively. So far in 2018 the stock has managed to work its way up to the yellow 50-week simple moving average and is currently contesting with it as a layer of resistance that could become technical support.
On the daily chart, we see that in 2019, General Electric stock has managed to overcome its yellow 50-day and blue 100-day moving averages in a sound technical manner. Most recently, the stock also pushed back above its red 200-day moving average, which is acting as support.
I drew the black diagonal line on the chart to determine how much the stock is visibly coiling up below this line for what looks to be an increasingly higher probability of a next leg higher into the low teens.
Active investors and traders could look to buy the stock upon a push above $10.50, using $11.50 as a next upside profit target, followed by $12. Any major bearish reversal that holds on a weekly closing basis would be a clear stop loss signal and indicate that the stock is simply not yet ready to go higher.
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