Global technology and financial services giant General Electric Company (GE) has been in a steady incline ever since the 2009 capitulation bottom in the broader market. Yet despite the stock’s roughly 250% rise since then, it has barely recouped 50% of the big drop off from late 2007 through early 2009. In other words, the stock’s steady and orderly incline that has occurred over recent years can easily continue over the coming months. Given GE’s wide scope in businesses, it is a decent barometer for the economy. As long as the stock continues to rise in such a steady fashion it is in my eyes bad risk/reward to bet against an economic recovery in the medium term.
On the 24 month chart below the orderly rise is somewhat better visible. Note how each advance was followed by a consolidation/mini correction period, which allowed the stock to then again gain enough strength to push higher. In this time-frame, as long as the stock holds above the $21.50 area, the pattern of higher lows and higher highs remain intact.
Most recently General Electric Company (GE) rallied a sharp 15% off its April lows, just as the stock, as well as the broader market looked to be breaking below key support levels. This latest rally, albeit steep, did bring the stock right back to a resistance area around $23.90, on a daily closing basis, which dates back to early March. From here, while the market has gotten choppier in recent trading days and trading breakouts is currently a strategy not working as well as it did just two weeks ago, a break above $23.90 would be bullish. How far could the stock rise in the intermediate term upon a successful breakout? Given the company’s wide array of businesses, much of the stock’s upside potential will also depend on what the broader stock market does. Assuming the S&P 500 doesn’t dive off a cliff however, General Electric Company (GE) could certainly move toward the $25 mark over the next two months.