Long-Time Sell-Side General Electric Bear Changes His Tune

Let's see if there's anything new on GE's charts.

General Electric Co. (GE) is the "Stock of the Day" at Real Money on Monday . It seems that a sell-side analyst has changed his tune about the company. Stephen Tusa, an industrial goods sector analyst with J.P. Morgan (JPM) , has lifted this bearish opinion on GE. I will leave others to dig through his report and fundamental reasons but we have been positive on the stock for several months. Let's see if there's anything new on the charts. 

In this daily bar chart of GE, below, we can see that prices have reacted lower in the past month as global pandemic worries have prompted selling on the expectation of slowing growth. GE tested and so far held above the rising 200-day moving average line. GE gapped below the cresting/declining 50-day moving average line in the past week or so.

The daily On-Balance-Volume (OBV) line shows a peak in late November and weakness to date. The OBV line diverged from the price action until the latter part of February.

The Moving Average Convergence Divergence (MACD) oscillator shows a peak in November and just moved below the zero line in the past week for an outright sell signal.  

 

In this weekly bar chart of GE, below, we can see that prices are still above the bottoming 40-week moving average line. The size of the base pattern on GE is substantial and the weekly OBV line hardly shows any weakness.

 

The MACD oscillator on this longer time frame has been bullish since November and only now has narrowed in the past couple of weeks. 

 

 

In this daily Point and Figure chart of GE, below, we can see a potential longer-term price target in the $22.50 area. The volume by price bars on the left scale suggests both support below the market and resistance in the $11.50-$12.50 area.  

 

Bottom-line strategy: I don't know how wide an institutional audience Mr. Tusa has and whether his reasoning will generate aggressive buying in the near term. Weakness in the broad market could dampen his impact. As a technical analyst I would wait for strength back above $13 before buying or adding to longs. 

(General Electric and JP Morgan are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells GE or JPM? Learn more now.)

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