GENERAL ELECTRIC CO

7.28 +0.13 (+1.82%) Sell

GE does a dead cat bounce, it's still too early to buy into it

13 min read

GE delivered good returns today. On a longer term basis, investors in GENERAL ELECTRIC CO made +0.04% per day. Tuesday's performance of +1.82% was a significant outperformance compared to it's daily average.

[Themes containing GE]

Buy-and-Hold investors in GE experienced a maximum drawdown of -50.7% over the last three months. It returned -43.39% during this strong down trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals. The net profit from Short signals was +33.09%.

Trend

GE has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 14 days, GE underperformed the SP500 index on 53% days.

During the last three months GE was mostly loss making and delivered on average -0.84% per day. It's best return during this period (of +7.76%) was on Tuesday, 13 Nov, 2018. While it's worst loss in the same period (of -8.78%) was on Tuesday, 30 Oct, 2018. There was initially a bullish trend during this period which started on 1 Oct, 2018 and went on till 8 Oct, 2018. The bullish trend returned +19.1% to investors. This was followed by a bearish trend that started on 24 Oct, 2018 and ended on 5 Nov, 2018. This bearish trend lost -30.48% of investor capital.

On monthly basis, GE delivered losses in more months over the last year, than profits. GE delivered profits less regularly than SP500 index. GE was also a more risky investment than SP500 index as it's worst month in the last year, Nov 2018, returned -25.74% compared to -7.75% returned by SP500 index in Dec 2018. GE had a longer winning streak of losing months than SP500 index. It went down in 5 straight months (from Aug 2018 to Dec 2018) during which period it delivered -62.94%. It is interesting to note that both GE and SP500 index significantly outperform during months when quarterly/annual results are announced.

It is time for us to stand and cheer for the doer, the achiever, the one who recognizes the challenge and does something about it.
-- Vince Lombardi

GE is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in GE's volatility from 20 Sep, 2018 to 30 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that GE has significant negative skewness in it's return distribution. This indicates that GE is very risky for short-term investment and can significantly underperform for long durations.

Investors trading in GE derivatives at this moment can consider 'Protective Collar' options strategy to receive better risk-adjusted returns.

SP500 index has more chance of extreme outcomes than GE. Therefore, SP500 must receive a lower allocation than GE in your portfolio. SP500 index usually has shorter drawdown period than GE.

On a general note (since you are interested in GE), three instruments that are extremely volatile are IMTE, VIPS and OPNT. They must all be evaluated prudently and investors are better off avoiding them at the moment.

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