Monday, July 23, 2012

General Electric Approaching Psychologically Important $20.16 Level (GE)

Just funnin' ya, the psychologically important level is $21.01.
One of the things we look for is relative strength on down days. In this case GE is up 9/10% vs. a 1% decline on the DJIA of which it is a component.
The point that interests us is the 52 week high at $21.00.
As I've mentioned, in the late '90's a very wealthy and very smart investor said to me:
"GE's phoney-baloney earnings smoothing is going to have to end, it's approaching the level of a joke, in addition to violating the '33 act".
I sold that week,managed to avoid the entire Jeff Immelt tenure.
Now I might be interested. If the stock can clear this year's high the next spot it stopped was the April 2011 high of $21.65.

Warren Buffet has a higher target, $22.25.
That's the exercise price on Berkshire's warrant to purchase 134.8 million common shares.
The warrant expires in October 2013.

This little excursion into transnational mega-cap land was prompted by Morgan Stanley's estimate revision following Friday's earnings.
Multinational conglomerate General Electric Company on Monday caught some tepid commentary from analysts at Morgan Stanley.

The firm lowered its earnings estimates for GE through 2014, citing a flattening backlog of orders in its industrial segment. Morgan Stanley maintained its “Equal-weight” rating and $22 price target, which suggests an 11% upside to the stock’s Friday closing price of $19.87....
GE shares fell 31 cents, or -1.6%, in premarket trading Monday.
That $22 target is also Nomura's reiterated number, albeit with a "Buy" rating.