General Electric’s supercharged comeback could be hitting a wall.
Shares of the industrial conglomerate slid by nearly 1% on Thursday after the company agreed to pay a $200 million fine from the Securities and Exchange Commission to settle charges it misled investors about its power and insurance divisions.
The stock is up almost 89% in the last three months and is on pace for its best quarter on record.
The charts look more foreboding, Miller Tabak’s chief market strategist, Matt Maley, told CNBC’s “Trading Nation” on Thursday.
Not only is the stock’s weekly relative strength index — a key momentum indicator — the most overbought it’s been since 2013, but its daily RSI hasn’t been this overbought since 1987, Maley said.
“I think the stock can hold up and rally even a little bit further here into the end of the year because I think the broad market will hold up, but I’d look for a pretty fairly decent correction next year at some point in the first half of the year,” Maley said.
“Therefore, I think some people should take some chips off the table after we get past Jan. 1,” he said.
On a longer-term basis, however, the stock’s “got some great upside potential,” the strategist said.
GE’s “strides” in the health-care space could help the company seize on that potential, said Gina Sanchez, founder and CEO of Chantico Global and chief market strategist at Lido Advisors.
“The demand for ventilators and monitors” during the Covid-19 pandemic has helped drive GE’s bull case, Sanchez said in the same “Trading Nation” interview.
“But if you look across the GE business, GE is actually extremely poised as an industrial to benefit longer term from a return to normal,” she said. “So, that restructuring could actually pay off post-Covid.”
GE closed at $11.32 on Thursday. November was the stock’s best month on record.
