Escape from GE trade

[wp_lightbox_prettyPhoto_image link=“http://www.economicsignature.com/wp-content/uploads/2018/02/20180218-GE-weekly.png” description=”In mid-November 2015, there were large volumes, as shown in the daily chart and weekly chart.  However, such large volumes did not drive a price surge. Shortly after, GE experienced a correction. In early 2016, GE announced operating loss and moving its headquarter from Connecticut to Massachusetts. Since then, GE’s stock price has been smashed.” source=”http://www.economicsignature.com/wp-content/uploads/2018/02/20180218-GE-weekly.png” title=”Escape from GE trade”]

 

A large volume usually is a signature left by key institutional players. Thus, large volumes are associated with substantial price surges or drops. In a rising market, when a large volume cannot drive the price up, we must be very cautious. There is a high probability of (although not always) a down turn in near future. Typically, when a price-volume deviation emerges, it is better to run away.

Let’s use General Electric (GE) as an example. GE has been a well established company and a component of DOW 30. Could we foresee its coming business reorganization from stock market analyses? In mid-November 2015, there were large volumes, as shown in the daily chart and weekly chart.  However, such large volumes didn’t drive a price surge. Shortly after, GE experienced a correction. In early 2016, GE announced operating loss and moving its headquarter from Connecticut to Massachusetts. Since then, GE’s stock price has been smashed.

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