Shares of General Electric (TO GIVE) – Get Report rallied on Tuesday, up about 1.5% after reporting gains.
Now that may not sound that impressive – 1.5% is hardly anything to get excited about.
That’s true. But on a day when the Nasdaq is down about 2% and the S&P 500 is down about 50 points from its lowest point, a gain of 1.5% feels a little better.
However, investors want to know if GE will be good for more than a day.
But what else can the company do? GE beat earnings and revenue expectations while boosting its industrial free cash flow forecast.
Cash flow has been at the root of investor concerns, so to see this metric improving should give the bulls some reassurance.
As General Electric has been consolidating in the last few months, others in the group have, too, such as Honeywell (THEY) – Get Report and 3M Co (MMM) – Get Report — the latter of which is slightly lower than the profit.
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Trading General Electric Stocks
There are pros and cons when it comes to GE’s chart. First, I like the way stocks burst over the $12.25 area and then continued to find that level as support.
Although GE dipped below that line earlier this month, it was only for a day when shares quickly bounced back up.
With Tuesday’s action, stocks are gaining back the 20-day moving average and removing downward trend resistance. That 50-day moving average remains a bit tricky, though.
For GE to have a nice rally, we need to see the stock hit the 50-day moving average. If possible, the July high will come into play at $13.63 followed by a range resistance near $14.40.
Should stocks reach that level, the $16.50 to $16.75 area could be on the table.
On the other hand, let’s keep an eye on the low post-profit and the 21-day moving average. Losing both points could trigger a retest of the $12.25 level along with the 200-day moving average.