Shares of General Electric Co. on Tuesday broke through a technical barrier that had set a bearish tone for the former Dow component’s stock for over two years.
The stock GE, +4.52% closed up 4.5%, after the industrial conglomerate reported a first-quarter adjusted profit, revenue and industrial free cash flow (FCF) that beat expectations. Meanwhile, the company said on the post-earnings conference call with analysts that a key reason for the FCF outperformance was timing of orders and customer collections, which should “balance out” over time. Read more about GE’s power business.
Also read, about how GE’s free-cash improvement might not be all that.
Analyst Jim Corridore at CFRA trimmed his stock price target to $12 from $13, but reiterated his buy rating. “While GE has a lot of work to do, we think today’s results indicate a positive step in the right direction,” Corridore wrote in a note to clients.
GE’s chart appears to agree. While the stock couldn’t sustain intraday gains of as much as 8.2%, it managed to close above its widely followed 200-day moving average (DMA), which many chart watchers view as a dividing line between longer-term uptrends and downtrends.
The stock had traded above the 200-DMA on an intraday basis on Feb. 25 but fell below the line at the close. It rose above the line intraday again on Feb. 27, but failed to hold the gains and closed fractionally below it.
The last time the stock closed above the 200-DMA line was Jan. 19, 2017. The line currently extends to $10.097, according to FactSet data.
The stock also closed above the 50-day moving average (DMA), which is viewed as a guide to the short-term trend. The stock hadn’t closed above that line, which extends to $9.803 on Tuesday, since April 5, 2019. Read more about GE’s stock being in ‘technical limbo.’
The last time the stock closed above both the 50-DMA and 200-DMA was Jan. 18, 2017.
Meanwhile, the Dow Jones Industrial Average DJIA, +0.15% has closed above its 200-DMA since Jan. 30, 2019, while the S&P 500 index SPX, +0.10% and Nasdaq Composite Index COMP, -0.81% have both closed above the 200-DMA since March 11.
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