All eyes remain on Action Alerts PLUS holding General Electric (GE) today for many reasons: It is part of the famed Dow Jones Industrial Average; it is widely held by institutions and individuals; and it has acted as a bellwether name at times. Is GE leading the flock lower or is it forging its own path to the downside?
Let's look at three charts and see what we can glean from the price action this morning.
In this daily candlestick chart of GE, below, we can see a downtrend with many red candles that show the close is below the opening (bearish). We can see falling windows (a.k.a. gaps) but no successful reversal patterns.
In this first long-term Point and Figure chart of GE, below, we can see a long column of O's with no countertrend moves. A decline to $17.50 will break the low trade of 2015 and could open the way to further declines. This part of the chart is bearish, but looking back to to 2011 we can see that we might start to see support around $17 to $15; $17.75 is the 50% retracement of the rally from $4.50 to $31 (the low and high extremes on this chart) and this may be a key level to watch.
In this second long-term Point and Figure chart of GE, below, we have added in a 45-degree uptrend line from the 2009 nadir. That long-term uptrend would be broken with a trade at $17 -- another key level to watch.
Bottom line: The volume of trading in GE is heavy and that can be a sign that some traders and investors are throwing in the towel. That can sometimes signal a climax low is being seen, but it is too early to tell. The $17.75 and the $17 levels are likely to be key to GE's intermediate-term future.
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