Forget the income generating machine of yesteryear. In 2019 today’s General Electric (NYSE:GE) is about capital gains and a continued turnaround story off and on the price chart of GE stock. Let me explain.
It’s true that General Electric’s Blue Chip status, a once famously reliable dividend and more than 65% of its value have been stripped from General Electric shareholders. But a damaged GE stock by some measures could be a very investable one for other good reasons in today’s market.
Nearly three years after hitting an intermediate peak following the 2008 financial crisis, General Electric is on the mend. On paper the bull case was reinforced entering May when the company released its latest quarterly results.
From steady and slightly stronger-than-forecast revenues and profits, reaffirmed long-term guidance through 2021, to offering much better-than-feared cash burn data supporting GE’s survivorship, the latest peek into the company’s turnaround was a good one.
As I wrote approvingly of in early May, General Electric’s quarterly confessional also hinted at better days ahead with a measured and purposeful response from the CEO. As well, while not exactly upbeat, JPMorgan’s Stephen Tusa, a long-time General Electric bear who lifted his ‘sell’ rating on shares to ‘hold’ in December, didn’t dig his claws back into GE stock either.
Other’s like InvestorPlace’s Will Ashworth see things at General Electric a bit differently. Will maintains a much more cautious view on shares. I get it and that’s what makes up a market. It’s also what makes up the price chart in GE stock and one which the bulls still look to be winning.
GE Stock Daily Chart
Since writing about GE stock’s ability to generate continued returns and capital gains for today’s bulls, it’s been a no harm, no foul situation of monitoring shares. Prior and in the aftermath of earnings, the recommendation was to wait for General Electric to trade above the report’s reaction high of $10.53.
Supporting the entry, a combination of Fibonacci, moving average and pattern support looked like an attractive way to enter into a momentum position if GE stock could clear the high with a breakout move. It hasn’t happened.
The good news is while the double bottom has failed to pan out, a higher low has developed. And GE is back above its longer-term 200-day simple moving average and into bull territory. Net, net and coupled with the continued lateral narrowing of price action, what I’m seeing in GE still looks overall bullish.
As for buying General Electric shares I’m more than happy to wait on GE to reassert its strength on the price chart for more than pocket change. I’d still recommend only buying shares on a move through $10.53. This may be a sacrifice in the short-run. In the scheme of things though, having a little patience may smartly avoid a world of hurt for a stock obviously not out of the woods yet.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies, related musings or to ask a question, you can find and follow Chris on Twitter @Options_CAT and StockTwits.