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GE hits new Multi-year Highs- Is this a Sign of Market Acceleration, or a Top?

Technical Summary: (No Updates on Turnaround Strategy or Earnings..Just Price Action, Momentum, Volume Analysis)

GE hitting the highest closing levels since 2001 is certainly a positive for the market, but in the past, spikes in GE to new highs have proven short-lived, and difficult to chase for those seeking to "Jump onboard" to buy the breakout.

Difficult to use GE strength as a proxy for what the market should do, i.e.- beginning a new period of acceleration, or thinking we might be in the "latter innings" of a bull move.  Breaks of intermediate-term trends in General Electric stock though have coincided with larger market breakdowns in the past, as GE peaked right near prior SPX market peaks in both 2000 and 2007.

Industrials as a group has hit new relative highs to the SPX, so this strength is certainly not isolated to GE's breakout, and the group overall has been outperforming with its recent surge   ( Industrials has demonstrated above-average relative strength on a 1, 3, and 6 month basis.  Yet, recently Transports have begun to lag, as seen by five straight days of weakness)

GE still looks to work its way higher in the next 2-3 months technically with only a break below $30 cancelling the "bullishness" of this recent surge.  Upside targets lie near $33.11, or the 50% ratio of its entire selloff from 2000 highs, with intermediate-term technical targets found in the high $30's. (Less likely this year )

 

GE's monthly chart since 2000 highlights the recent relative surge in the stock vs the broader market, along with the Industrials sector strength in moving to new relative highs also as this $300 billion behemoth has just hit the highest levels since 2001

GE's monthly chart since 2000 highlights the recent relative surge in the stock vs the broader market, along with the Industrials sector strength in moving to new relative highs also as this $300 billion behemoth has just hit the highest levels since 2001

Technical notes of Importance:

GE's move to new highs is occurring on lighter volume as might be expected when compared to the initial breakout last October, and momentum has not kept up of late

GE's attempts at breaking out above highs made 3+ months prior has historically been difficult to "chase" as movement up into March 2010 or early 2011 ended up coinciding with minor market (SPX) peaks, and even attempting to buy breakouts in Sept. 2012, or April 2015 was difficult in thinking one could make absolute gains.  However, relative charts have made sufficient progress of late to think GE outperforms the market relatively in the next 2-3 months as well as Industrials showing better relative strength than the SPX.

Breakdowns in GE are equally important to watch for as "breakouts"  Former pullbacks which emanated with September 2000 tops in GE ended up proving very important in coinciding with the larger correction in stocks (Sept 1, 2000 was a secondary high for SPX after peaking in March 2000)  Trend breaks in the upcoming future of the trend from 2009, which could take the form of a breakdown under February 2016 lows of $27.10, would be important and negative

Near-term technical targets lie up near $33.11 and then $39.50, just shy of the October 2007 peak, while a move under $30 initially and then $27.10 would be negative.

XLI Targets lie near last Spring's highs at $58.23, while the equal-weighted RGI (Industrials) is likely to hit $90.  The breakout above late 2015 highs is an intermediate-term technical positive, but the stock is overbought currently, and gains above prior 2015 highs should be difficult to come by