General Electric's Stock Looks Set To Break Out Ahead Of Earnings


General Electric Company GE is set to print its second-quarter earnings on Tuesday and roughly a week later will begin trading on a one-for-eight reverse split-adjusted basis.

When the company printed its first-quarter earnings on April 27, it reported revenue of $17.1 billion, which missed the analyst consensus estimate of $17.5 billion. The reaction to its earnings print was mixed and the stock initially fell 5% to start of the trading session but closed the day flat.

According to Josh Brown, the catalyst for GE's stock to break out higher may be the reverse split, which could help the company “to wipe the slate clean.” GE's board members recommended the split to align its number of shares outstanding with its peers and to aid in the company’s continued transition and growth strategy. The company currently has 8.78 billion shares outstanding and after the split takes place, at the end of the trading day on Aug. 2, that number will be reduced to about 1.1 billion.

Whether GE's earnings or its stock split will break the stock up higher remains to be seen, but from a technical standpoint, the stock looks ready to make a move north.

See also: How to Buy GE Stock

The General Electric Chart: GE gapped down July 19 held support at the $12.23 mark and bounced. On July 20 the gap was filled when bulls came in and pushed the stock up almost 6%. Since then, the stock has been consolidating the move, trading down slightly in a tight range.

The large move up followed by the consolidation range has caused GE to form a bull flag pattern on its daily chart with the pole created on Tuesday and Wednesday and the flag on Thursday and Friday.

Within the flag pattern GE has become pinned between the eight-day and 21-day exponential moving averages EMAs) with the eight-day EMA acting as support and the 21-day EMA acting as resistance. The eight-day EMA is trending below the 21-day EMA, which is bearish, but if GE breaks up from the bull flag it will be able to regain the 21-day EMA as support, which will make an eventual cross over the EMAs more likely.

GE is trading above the 200-day simple moving average (SMA), which indicates overall sentiment in the stock is bullish. The 200-day SMA is trending upwards and, in the future, may help to guide the stock up higher.

Bulls want to see the bull flag recognized and for bullish volume to push General Electric up over its higher resistance level at $13.58. If the stock can regain the level as support, it could trade back up toward $14.42.

Bears want to see GE lose support of the eight-day EMA and for the stock to lose support at $12.72. If the bull flag isn’t recognized and it loses the area as support, it could fall back down to the $12.23 mark.

Photo: Momoneymoproblemz via Wiki Commons

Market News and Data brought to you by Benzinga APIs
Posted In: Long IdeasShort IdeasTechnicalsTop StoriesTrading Ideas
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!