Analysts have debated the General Electric Company (GE) ability to survive well before the COVID-19 pandemic has swept the world in the first quarter. The crisis has brought to the fallen giant’s recovery plan to a complete stop, prompting officers to warn against a decrease in the second quarter of 2020 financial results, scheduled for Wednesday release. JPMorgan Stephen Tulsa summarize the disaster, noting that the first quarter has been bad, but he couldn’t ‘ really find the words for how bad T2 is.”
- General Electric warned of a decline in the second quarter of 2020 earnings and sales.
- The Accumulation of readings have dropped by several decades the bottom.
- Wall Street remains surprisingly optimistic about the long-term prospects.
The earnings consensus now stands at a loss of $0.09 per share to $17.27 billion in revenue, better than three months ago due to the reopening of efforts around the world. Even though, GE has been forced to cut permanently by 25% of the Aviation division workforce due to significant barriers in air transport. Surprisingly, the major investors that include Nelson Peltz and Raymond lot datio have opened new positions during the quarter, shedding rays of light on a bleak scenario.
Wall Street sentiment has also improved in recent months, the emergence of GE to a “Moderate Buy” rating on the basis of the five “Buy” and six “Hold” recommendations. No analysts are advising shareholders to sell positions at this time. Price targets currently range from a low of $5 to the high Street of$ 11, while the stock is trading at less than $2 below the median $8.22 target. This provision suggests that the company is fairly priced at this time, but could gain ground after an upside surprise.
Accumulation/distribution is an indicator rollup that uses volume and price to determine if a stock is accumulated or distributed. The accumulation/distribution is to identify divergences between price and volume flow. This gives an overview of the strength of a trend.
General Electric Long-Term Graph (2000 – 2020)
The stock posted a record high of $58.41 in 2000, after a decade-long upward trend, driven by the fall of communism. It was disposed of during the bursting of the internet bubble, finding support near $20 in 2002, and has recovered about half of those losses in October, 2007, high of $40.53. An aggressive decline reached 2002 in October 2008, the onset of immediate sharing and the spiral of death that stopped at 17 years old in March 2009.
Bulls have taken control in the new decade, the regular publication of earnings in 2016, when the rally ended at the bottom of $30. GE stock broke down from a triple top in 2017, participate in a historic downward trend that ended at the end of 2018, within a point of the 2009 support. The increase in subsequent originally posted 15 months in February 2020, leaving the place to a vertical dive significantly lower than the trough of 2009, in May, before ending a 28-year low. Long-term price action has now completed the inverse cup and handle pattern that increases the chances of a major breakdown.
The triple top is a type of chart pattern used in technical analysis to predict the reversal of the price movement of an asset. Composed of three peaks, a triple top signals that the asset may not be rallying and that the lower prices may be on the way.
General Electric’s Short-Term Chart (2018 – 2020)
The March bounce after the failure to reach 8.50 $l’, which gives a lower recoil and Can low. A second purchase of the spike failed at the same peak, the sculpture of the next step in a rectangular structure which could determine the long-term actions of the spell. More specifically, a third trip to the bottom for $6.00 or could trigger depression, which also violates 11-year support around $5.50. Even more disturbing, to put in place a downside target to zero.
The balance volume (OBV), the accumulation-distribution indicator warns battered shareholders that “less” is always the path of least resistance. OBV broke support at the lows of 2009, after a 15-month trial and has now dropped to a level not seen in three decades. Gravity could easily take control in this scenario, the slicing by the 2009 and 2020 the bottom. However, the calendar on the long-term patterns is extremely difficult to tell the difference investors to look for a third failure to a horizontal strength if the income trigger a “buy-the-news” reaction.
The Bottom Line
General Electric accumulation of readings have dropped several decades low, predicting that prices will soon follow.
Disclosure: The author held no positions in the aforementioned securities at the time of publication.