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General Electric's Technical Picture: Little Reason For Near-Term Optimism?

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General Electric's Technical Picture: Little Reason For Near-Term Optimism?
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General Electric Company (NYSE: GE)’s 50-percent dividend cut may not have completely blindsided Wall Street, but it has certainly triggered intense selling pressure on Monday. After opening down just about 30 cents below Friday’s close, the GE dump quickly began as dividend investors seem to be moving on to greener pastures.

GE stock was trading down by more than 6 percent on heavy volume in mid-day trading, and the stock is on track for its lowest closing price in more than four years.

Turning Blue

GE stock is now down more than 39 percent so far in 2017, and investors hoping for a relief rally following the dividend cut were sorely disappointed.

Analysts such as Deutsche Bank’s John Inch have been warning investors that a dividend cut was coming for months, but Monday's trading action revealed just how many investors had been holding out hope that the company could maintain its 4.7 percent payout while it undergoes its aggressive restructuring plan.

Now What?

For the remaining GE bulls, there appears to be little reason for optimism in the near-term. GE now plans to improve profitability by narrowing its business and divesting non-core segments, a process that could take years to complete. In the meantime, the stock has an ugly technical picture and few near-term catalysts. With the dividend cut, it has now lost income investors as well.

For now, traders will be watching how GE finishes the day on Monday.

A bounce into the close could be a positive sign that Monday’s session could be the high-volume capitulation day GE investors have hoped for all year. If selling pressure continues, GE may soon be headed back to the $18.00 level where it finally found buyers during the 2015 flash crash.

Joel Elconin contributed to this story.

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Image credit: Jeff Turner, Flickr

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