Rare GE Signal Flashes Again

GE is eyeing its longest daily win streak since February 2017

Oct 8, 2018 at 2:07 PM
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While the broader stock market suffered last week, General Electric Company (NYSE:GE) shares enjoyed their best week since March 2009. What's more, the stock -- which is higher today on upbeat analyst attention -- could enjoy more upside, if a recent technical signal is any indicator.

GE shares rallied last week as traders applauded a new CEO, who will receive payouts if the security rises at least 50% and stays at that level for at least 30 consecutive trading days. As such, the former Dow stock gained 16.74% last week, and came within 1% of its 100-day moving average -- a bullish signal, historically.

It's just the third time in 2018 that this GE signal sounded. Since 2009, there have been 36 signals, after which the shares went on to average a one-week gain of 0.6%, per data from Schaeffer's Quantitative Analyst Chris Prybal. Further, the stock was higher 61% of the time. That's compared to an average anytime one-week loss of 0.1%, with a 49% win rate.

One month later, GE was up 1.1%, on average, and was higher 56% of the time. Two months after a signal, the stock was 2.8% higher, on average. The security was higher 56% and 61% of the time, respectively. That's compared to average anytime losses over the same time frames, with a win rate below 50%.

It's the same story over the long term. At the six-month marker, for instance, GE was up 4.9%, on average, with a 59% win rate. One year later, the shares were 5.9% higher, on average, and in the black 68% of the time. That's compared to average six-month and one-year losses of 1.5% and 0.3%, respectively.

GE after 100day MA signals

Today, GE stock is up another 2.4% to trade at $13.50 -- set for its highest close since mid-July -- after Barclays upgraded the shares to "overweight" from "neutral," with the analyst waxing optimistic on new CEO Larry Culp. Separately, the company's GE Capital arm agreed to sell $1 billion of energy investments to Apollo Global Management. The equity is pacing for a sixth straight daily gain, which would mark its longest daily win streak since February 2017.

GE stock chart oct 8

There's plenty of room on the bullish bandwagon, if GE once again outperforms following the aforementioned technical signal. Currently, just four of 13 analysts deem the equity worthy of a "buy" or better endorsement, leaving the door open for additional upgrades to lure more buyers. Likewise, the stock's Schaeffer's put/call open interest ratio (SOIR) sits a 1.96 -- the highest percentile of its annual range, suggesting near-term options traders haven't been more put-biased in the past year.

 

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