GENERAL ELECTRIC STOCK MAY SEE THE LIGHTS GO OUT FOR A SPELL

General Electric (NYSE: GE) shares are back under pressure as the market has gone from its straight-up trajectory to a more volatile consolidation / corrective phase. The stock was lagging to begin with, so this more difficult market condition has only served to weight GE down even more. How tough can things get for GE in the short-term?What the bulls see in GE…• An attractive 3.5% dividend yield• A current ratio of 2.66 despite its long-term debt load• Cheap valuation metrics:o A price-to-book of 1.95; and,o A price-to-sales ratio of 1.79 • Positive levered free cash flow of $17.33 billion annually• A stock that has not yet fully participated in the market's upside – thus making it a great “catch up” candidateWhat the bears see in GE…• A heavily levered company that needs credit markets to remain friendly in order for its operations to run smoothly:o $378 billion in debt versus only $10 billion in cash reserveso A debt-to-equity ratio of 270% • The bears also are quick to point to GE's anemic revenue and earnings growth projections (1.2% and 8.3% respectively) – which take a seemingly low PE ratio of 15 and turn it into an expensive one. • GE stock is setting up for a drop to around $23.67 if the prospective “abc” downside correction pattern plays out fully. The technical take on GE…Technicians note that GE stock looks like it is in the midst of an “abc” downside correction with targets down at around $23.67. That level represents both the Fibonacci projection for the “c” leg of the “abc” formation as well as the support provided by the broken downtrend line. From there, the stock should, in theory, make a nice move to the upside. If $23.67 is violated on the downside on a closing basis, however, that bullish scenario will be negated. Overall…General Electric may be in for more difficult trading in the short-term as this “abc” pattern plays out. Once the downside target at $23.67 is tested, the bulls may have a shot at seeing some upside action – for a change.