Figure 1: Daily chart of General Electric (GE).
The triangle that has formed on GE's chart has near perfect volume and if the volume continues to increase as I think it will then the breakout will be confirmed. The breakout is in the $27.25 area and it is poised to break through my third fan line to change temporary direction from down to up. There is a tendency for these issues to jump over the lines so don't be surprised if it gaps a little. These gaps are created from the anticipation of those who can no longer wait to jump in and ride it upwards. They bid it up higher. This will be a breakaway gap.
Figure 2: Weekly chart of General Electric.
In addition, Figure 2 of the weekly chart shows the intermediate term trendline is in the $32.00 area. This resistance will be a good area to lock in profits since it will likely back away from this line. While this may not be permanent, it is always easier to get back in at a lower price and accumulate more shares for the next ride up.
|Figure 3: Monthly chart of General Electric.|
|Graphic provided by: SuperCharts.|
|The monthly chart in Figure 3 clearly shows that the 22-year long-term trend has not been broken. In most equities the long-term trend was broken. Whether or not this trendline breaks on the next down move is still unclear but for now the direction is up and accumulating a long position off of the 22-year trendline seems like the prudent trade. There is limited downside risk and if it fails to break topside on the first run at the $27.25 line with increasing volume then a sell order must be given immediately to protect your position.|
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