Opinion on  General Electric Company (GE)     Sector: Conglomerates  >  Industry: Conglomerates
Ascending Triangle

I am bullish on GE because I think the chart pattern is showing an “Ascending Triangle”, among other reasons. Ascending triangles are generally considered bullish and are most reliable when found in an uptrend. Therefore, my bullish sentiment may be somewhat ahead of the game since GE has been in a downtrend. However, I will explain the ascending triangle pattern that I see.

 

In an ascending triangle pattern, the top part of the triangle is flat. For GE, this flat, top part of the triangle has been made by the stock hitting $27.99 on June 25, $28.06 on July 08, $28 on July 17, and $28.01 on July 18. Basically, $28 marks the flat, top part of the ascending triangle for GE.

 

To complete the ascending triangle, the bottom part of the triangle must have an upward slant. I see this upward slant forming with the following: bottom at $26.26 on June 27, higher low of $26.51 on July 2, and another higher low of $26.65 on July 15.

 

Whether or not this chart pattern is a true ascending triangle and will turn bullish is the million dollar question.

 

Looking beyond the chart pattern, I believe Immelt regained some investor trust by meeting 2 ^nd quarter guidance/estimates. Up until this point, the 1 ^st quarter miss and lack of trust in Immelt that ensued, obviously weighed heavily on the stock.  Simply regaining some of that trust is bullish for this stock. Furthermore, the finance side of the business has been hurting GE. Specific to GE, I think the worst is behind us. I have no empirical data to prove this, but with better than expected quarters for C and JPM, I am starting to think that maybe investors knocked GE a little too much for its exposure to the “credit crisis”. The sale of some of its consumer finance/loan units doesn’t hurt either. And finally, I think the sale or spin-off of some of its consumer and industrial businesses will be a plus.

 

More on ascending triangles…

 

The ascending triangle is a variation of the symmetrical triangle.  Ascending triangles are generally considered bullish and are most reliable when found in an uptrend.  The top part of the triangle appears flat, while the bottom part of the triangle has an upward slant.  In ascending triangles, the market becomes overbought and prices are turned back.  Buying then re-enters the market and prices soon reach their old highs, where they are once again turned back.  Buying then resurfaces, although at a higher level than before. Prices eventually break through the old highs and are propelled even higher as new buying comes in. http://www.chartpatterns.com/ascendingtriangles.htm