Friday, December 31, 2010

A Look at General Electric's Recent Sprint Upward (GE)

We may be seeing a turn toward the megacaps as the bull gets older, the period of Russell 2000 outperformance may be about to end, with GE's move foreshadowing the change.
From Schaeffer's research:

Trading Tools: General Electric Set to Finish 2010 Near Fresh Highs

Short- and long-term traders have tame expectations for GE

With 2011 just hours away, I thought it was appropriate to look at General Electric Company (GE), which is in the midst of a year-end sprint. During the past several weeks, GE has staged a rally along its 10-week and 20-week moving averages, and is now within a stone's throw from annual highs.
Like most stocks, GE took a huge hit in May with the "flash crash," and then again in July as the market hit what Ryan Detrick dubbed a "four-year cycle low." However, despite the year's hiccups, GE has added over 20% in 2010, and is resting above strong technical support heading into the new year.

Weekly Chart of GE Since January 2010 With 10-Week and 20-Week Trendlines

However, GE hasn't just piqued my interest; long-term option players have also targeted the Dow heavyweight lately, as evidenced by its multiple appearances in the Schaeffer's Most Active Options filter on Thursday.

Traders took a liking to GE's January 2012 20 call on Thursday, with over 2,400 contracts changing hands. However, this activity was not necessarily bullish, as nearly all of these calls crossed at the bid price, suggesting that they were likely sold. Open interest at this LEAPS option increased by 1,585 contracts overnight, confirming that a fresh batch of short positions were added here...MORE