General Electric Company (NYSE: GE) shares are trading slightly higher Tuesday morning, a potentially bullish near-term technical sign. GE shares on Monday dipped below $9 for the first time since January, but the stock quickly bounced and may have finally found some support.
GE's stock sold off by more than 7 percent earlier this month when JPMorgan analyst Stephen Tusa downgraded the stock and lowered its price target to just $5. The downgrade halted GE’s 2019 momentum after the stock had bounced from a low of $6.39 in December to as high as $11.28 in February.
Last year was another brutal one for GE investors, but the stock finally put a bottom in place when it bounced off the $6.50 level twice in December and never looked back. Tusa’s downgrade triggered a bearish breakdown out of a pennant technical formation that had been in place for roughly two months. Benzinga reported on the breakdown on April 8.
At the time, we said $9 would be a key support level in the near-term and that level appears to be holding this week. In addition to Monday’s bounce, $9 served as support in both February and March as well.
If the $9 level continues to hold throughout the rest of the week, traders will shift their focus to a potential technical bounce. The first resistance level will likely be the 50-day simple moving average at around $9.85. Above that, the 200-day SMA at $10.22 will be the next potential resistance. This level is also roughly in-line with the resistance level of the pennant prior to the breakdown earlier this month.
Long-Term Outlook Bearish
If GE ultimately dips back below $9 and closes there, it would be a significant technical breakdown. The stock could find support at around the $8.50 range where it consolidated throughout most of January. If not, GE shares are likely headed back down to the December lows at $6.50.
The bounce at $9 this week is a potential bullish sign in the near-term, but there’s still not much to like about GE’s longer-term technical outlook. February highs of $11.28 were still well short of October highs of $13.21. GE shares consistently made lower peaks throughout 2018, a hallmark trait of a bearish trend.
If $9 support holds this week, there’s another bearish pattern to watch for. Given the upper resistance level of the pennant is still in place, GE could now be forming a bearish descending triangle pattern, which suggests $9 support may only be temporary.
At time of publication, GE's stock traded at $9.07 per share.
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