General Electric Leaves the DJIA Behind as It Plots a New Course

 | Jul 05, 2018 | 12:12 PM EDT
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Now that you have gotten used to the Dow Jones Industrial Average (DJIA) without General Electric (GE) , a fresh look at the charts and indicators seems in order.

(For more on GE, see Jim Cramer's "Don't Buy Into These Contortions of Negativity")

In this daily bar chart of GE, below, we can find some improvement in the chart and the indicators. From last July to April GE spent nearly all of its time below the declining 50-day moving average line. The line has finally turned flat as GE has swung above and below this shorter indicator.

The 200-day moving average line is still declining and a rally above $17 is needed to break it. The pattern of volume since January shows a number of surges near 200 million shares. This kind of heavy volume with prices stable can suggest a shift of ownership to strong hands from weak hands.

It is quite possible that over the past six months that many holders of GE became discouraged and liquidated their holdings while other investors with more patience and perhaps foresight became buyers.

The daily On-Balance-Volume (OBV) line made a low in late March and has made some uneven improvement the past three months.

The trend-following Moving Average Convergence Divergence (MACD) oscillator crossed above the zero line in late April and signaled another cover shorts buy signal last month.

In this weekly bar chart of GE, below, we still do not have a bullish story. Prices are below the declining 40-week moving average line.

The weekly OBV line is still bearish and MACD oscillator has a long way to go before crossing above the zero line.

In this Point and Figure chart of GE, below, we can see a double bottom at $12.67. A rally to $15.46 is needed for an upside breakout. A $17.04 price target is indicated.

Bottom line: In one subtle way GE seems to be bottoming in that it is showing less reaction to news that seems to be bearish. The road back to higher prices and an uptrend will be long but it looks like it has started.

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