Someone asked me why I thought GE should go down when it is quite obvious that this is a very well run company (Jack Welch and now Jeff Inmelt, 6sigma, 20% hurdle rates and, by the way, the ONLY original stock left in the DOW ). What is there not to like? Well, apart from the minor little inconvenient fact that there are a fewÂ small flies in the ointment, the beauty of EW is that it is not concerned by any of that. It simple is pattern recognition, nothing more, nothing less. So have a look at this chart.
Notice the classic correction, an a-b-c down within which the c is approximately equal to the a. At that point it gets a little silly as the stock would be worth close to zero.