Review:
- On January 21 2018, when General Electric (GE) was trading around $16, we said, “the speed at which the current decline is taking place indicates that sentiment will push the stock to the $5.27 price and the elimination from the Dow Jones Industrial Average is eminent.”
- On December 12, 2018, General Electric (GE) achieved a closing low of $6.45, 22% above our estimated downside target.
- On January 1, 2019, when General Electric was trading around $7.25, we said, “…now is the time to consider the upside resistance targets. The above chart lays bare the expectations for an upside move.” We also said, “The year 2019 could be forgiving to GE…” This was 12.40% above the December 12, 2018 low.
- On December 31, 2019, the closing price of General Electric stood at $11.16.
Update
Before the full year of 2020 was under way, General Electric had managed to give back all ofthe 2019 gains. The era of forgiving has been quickly forgotten.
Now that General Electric sits on the cusp of the 2018 low, the questions becomes, can the stock recover and retest the 2020 peak? We don’t think so for two primary reasons.
- Declining below the $19.82 upside resistance target.
- The potential for a recession for the next 6 months.
The fact that the price could rise as expected and the falter at the very resistance target that was highlighted near the 2018 low suggests that there are powerful forces at work.
The reality is that a recession is on the way. the depth and length is the only unknown. However, we have always maintained that if General Electric couldn’t do well during a booming economy then what should be expected during a recession?
We advise caution as the market seems bound and determined to expose failings and frauds which will result in collateral damage to companies like General Electric.