GE new take

ge april 21 2018

We thought GE might have hit bottom a little while ago. That might have been incorrect but it does not matter as you could get out of the trade breaking even, which I would not recommend under $16 to $19 or so.

There is something wrong with the count last time but I may be over-thinking this. There are a number of reasons why this may not be the bottom. The low back in 2009 was around $5 so this stock has risen $31-5=$26. It is “normal” for second wave corrections to retrace as much as 78% or even more of wave 1. In this case that would suggest a low of around $11. Next the count does not add up. My educated guess here is that we just completed waves 1,2 and 3 and therefore need to add a 4 and 5 before hitting bottom. Alternation here would favour a flat or triangle, which is an elongated flat, as shown. The third argument is the gap in the middle theory. There is no gap in this chart but the “thinnest” point is at about the $21 mark, or $10 from the top. A similar distance down again would bring us to $11 as well. Then wave 3 up can start.

Fundamentally GE cannot go bankrupt. It is at least as important as GM which did go bankrupt but was bailed out. It is too important militarily and it just will not happen. Which does not mean that you cannot lose a lot of money but it does mean that things are ok at the other side of the valley. Good luck.

GE update, fooled again.

ge feb 13 2013

See previous blog. This was not supposed to happen according to the experts, but here we are with a new high of $23.44, well above the previous one of $22.970. So what went wrong? Perhaps the 5 wave down sequence was preceded by a small a and irregular b making the 5 waves the c. Perhaps the present climb will prove to be an irregular b-wave. It is all splitting hairs and simple put EW does not work always. Particularly not in real time.

GE, General Electric

All the big stocks like Walmart, Exxon, IBM etc. have outperformed the index this year, GE included. Earlier (see blogs) we advanced the notion that GE might actually be so much out of phase with the market overall that it is, perhaps, in a new bull market. After all $5 or so seems low enough. Here is the chart again;

ge sept 2012

At $23 GE will have retraced 1/2 of the recent drop from $42 (it was once at $60!). The problem with the bull case is that there is no impulse wave up at all, although, I guess, you could stretch things a little and argue that we are presently in a wave 3 or even 5 of a first impulse wave. Not very convincing. A much better interpretation by far would be that the entire move from the low is actually “corrective”, that is counter-trend. The pattern would be an A-B-C with the B as an expanding triangle, treading water for 2 whole years. If the C is to be vector equal with the A, a very common event, it should unfold in 5 waves and end on the circle where it is now. Some are inclined to call the moves from b on the jaws of death. As noted elsewhere this pattern does not exist in EW-land and it has a little too dramatic ring to it. Here at least, it may be conveying the right message.

GE and MS, when patterns are crystal clear.

EW contains a lot of ambiguities which is why 2/3 of the time you are really not sure at all what might happen. To put it in other words, sometime the light is green, sometimes it is red and most of the time it is yellow. Two stocks that have nothing much in common are green for the next few years (but not necessarily months). Gen. Electric and Morgan Stanley both have very articulate A-B-C corrections which are somewhat stylized in the charts below. By the way, these charts do not show the intra-day or week lows, for instance GE actually did get below $6).

ge july 2011 ms july 2011

Unfortunately I cannot get them on the exact same time-frames, unless I put them together in one single chart;

ge ms july 2011

Both these patterns would strongly suggest that these stocks are back on their way up in a new bull market. MS has already retraced 50%of the first wave up, whereas GE may have a little more to drop in what is presumable a wave 2. In both cases a retest of the lows cannot be excluded completely but the odds are better that you will win with these stocks than with, for instance a Pepsi;

pep

This one is bright red. Should it make a similar A-B-C as the others a target of about $40, where wave 4 of previous degree resides , would fit the picture. That is down some $30 from where we are now and there is only $10 to the upside until you hit the upper trend-line. There is nothing particularly wrong with the stock. It has a P/E of 17 and yields about 3% .