tantamount
Long

GE Divergence Study

NYSE:GE   GENERAL ELECTRIC CO
Since the 70's, GE has closely followed a price structured rise of the S&P 500 . However, at the end of 2016 you can clearly see GE stock began selling off, diverging in price over next several years while the S&P continued to climb higher. What has my attention about this chart is how price was once in lock step for 40 years, then winds down inversely to an extent.

So, what now? I'm wondering if GE could be entering another bullish cycle as the S&P appears to be finishing out one. In other words, could these two tickers prices flip and diverge opposite again? Let's look at some details below to help us analyze.

1) Technically, there's massive bullish divergence forming on the daily chart for GE . Inversely, I see massive Bearish divergence on the S&P chart (see my profile for this chart idea).

2) Fundamentally, we've seen several consistent years of bad financial news coming from the conglomerate all the while there's been a concerted effort turn things around within the company (i.e. leadership changes, selling off businesses to pay down debts, layoffs, focusing on Aviation, etc. ). It is just recently that we're now seeing positive signs from the company once again. New contracts, debt reduction efforts, FDA approvals in healthcare, etc.. So, could GE be reaching the end of the negative news cycle?

3) Given that FAANG stocks are grossly over valued and major indices are teetering at nosebleed levels... will traders begin seeking cheaper opportunities/hedges in reputable household names. Specifically, would a conglomerate type such as GE be a good investment if there is market uncertainty or worse, decline in the near future?

Time will tell!
NOTE: Not trading or investment advice. Entertainment only.
Comment: 10/28/20 - GE shares jump after company posts surprise adjusted third-quarter profit, revenue tops expectations. Lowered debt by 2.5B dollars.

Comments

I've been watching GE for few weeks. I think at that price it is a steal. Will GE go out of business? The new CEO is re-structuring the company and they will invest in renewable energy. (Wind Turbines, Hydro,etc ...) Company seems to be transforming itself.
Reply
tantamount fleveneur
@fleveneur, I agree. With government contracts for aviation, defense, and nuclear, I believe the company can survive. Focusing on renewables while the Aviation business returns will only help the company revenue streams.
+1 Reply
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