The monthly chart for General Electric (NYSE:GE) offers many volume price analysis lessons for traders and speculators but makes for dismal reading for investors and long term holders of the stock, with yesterday’s revelations of fraud adding further to the very bearish picture. And the question now, is how low can this stock go?
Scrolling back to November 2015 and the heavy selling by the market makers is self-evident, with the narrow spread up candle associated with the heaviest volume on the chart. This was the initial selling into weakness and a clear anomaly, and the precursor to the weakness which developed in the $32 per share region. The development of the trend lower which started in 2017 is associated with rising volume confirming this heavy selling. Note the candle of January 2018, a classic in a falling market with high volume and a deep wick to the upper body and sending a signal of further weakness to follow.
October and November of 2018 then saw further sustained selling before the minor recovery of 2019. However, note the falling volume on the rally and subsequent into congestion, signaling a lack of market maker participation and the prospect of a further move lower, the catalyst for which was yesterday’s news as we break away from the volume point of control. And the question now is whether this stock is likely to test the low of 2009 at $5.53 to which the answer is yes.
Finally, notice the trend monitor indicator has remained steadfastly red from early 2017 and confirms the heavily bearish sentiment longer term. Good times will return for GE but not in the short term, and only when we see a campaign of buying which will extend for some time given the floating supply which has to be absorbed. Once complete a low volume test will follow and a move higher under rising volume from an extended congestion phase can then develop.