Elliott Wave Analysis of General Electric (GE) by Sid from ElliottWavePredictions.com. Click on the charts to enlarge.
This continues my series covering Dow 30 components. As a refresher, so far in the series this year, I’ve posted technical analysis of American Express AXP), Boeing (BA), Caterpillar (CAT), Cicso Systems (CSCO), and Chevron (CVX).
As the GE monthly chart above shows, I believe that General Electric stock, just like the Dow Jones Industrial Average, carved out a cycle (teal) degree wave 4 during the late 60’s and early 70’s, ending in 1974. This was followed by an extended 5th wave to the upside, concluding in the year 2000. Note that after extended 5th waves, the following corrective period quite often corrects back to the extreme of wave 2 within that preceding extended 5th wave. In GE, that target is an amazingly low $0.91 per share. Is it actually possible for GE to drop over the next few years down to a buck? It doesn’t seem likely. And based on Elliott’s guideline of alternation, it won’t. If my labeling of the deep (90%) correction ending in 1932 in the DJIA as the end of Supercycle wave 2 is correct, Supercycle wave 4 is likely to be a more shallow, sideways affair. It therefore seems more likely that GE will not drop substantially below the 2009 low of $5.73 before Supercycle wave 5 to the upside gets underway.
As similar as the upward movement in GE is to the DJIA from 1974 though 2000, the two have definitely parted ways since. Unlike the Dow, the Y2K top remains the all-time high in General Electric to this day. Down from that August 2000 all-time high, you can see the obvious ABC zigzag through March 2009. I’ve labeled the 2000-2009 period as Cycle (teal) wave W within an unfinished Supercycle (olive) wave 4. Why? Why not call 2009 the end of Supercycle wave 4? The answer is due to the “character” of the price action since the 2009 low.
As the weekly chart above shows, if the upward movement from March 2009 was to be labeled a 5-wave impulse to the upside, with wave 1 ending in April 2010, and wave 2 ending in October 2011, the supposed wave 3 (from October 2011 though January 2014) should have been much stronger than it was. Not only did it not break out of the top of the “base” channel (shown in burgundy), it really never moved substantially into the upper half of that base channel. Additionally, within that “theoretical” burgundy wave 3 (from Oct 2011 thru Jan 2014), black waves 1, 2, 3, and 4 are already finished, and wave 3 was shorter than wave 1 was. This is NOT wave 3 stuff! Lastly, the monthly RSI has been diverging for over 5 full calendar quarters. For those reasons, I am labeling the upward movement in GE stock since March 2009 as Primary (burgundy) waves ABC, with the C-wave not quite complete yet. If I’m correct, once Wave C (burgundy) completes, Cycle (teal) wave X will also be complete, and will be followed by (multi-year) downward movement in the form of a Cycle (teal) wave Y.
It is also worth noting that Sentient Trader software is considering the October/November 2011 lows as the last 4.5-year Hurst cycle trough in GE, identical to its analysis of the DJIA, when starting the analysis at the Y2K top. This means that the next 4.5-year cycle trough is due in GE in early-to-mid 2016, and the next 4.5-yr cycle trough after that in late 2020. These dates for projected cycle lows keep popping up in independent Hurst Cycle analysis of stock after stock, and index after index.
Finally, on the daily chart above, black wave 4 (within primary/burgundy wave C) appears have completed a one-year-long blue ABC zigzag on January 14 of this year. Wave B (blue) of that zigzag was a pink a-b-c-d-e triangle, so the last wave down into the Jan 14 low was a terminal thrust. Upward movement since January 14 is therefore very likely black wave 5, to complete burgundy wave C. Black wave 5 should subdivide into 5 blue waves. It appears that blue wave 3 is still underway, with a target of $29.20. That should be followed by a blue waves 4 and 5, with the 5th wave topping at about the top of the (black) channel, around $30.50. Importantly, because black wave 3 was shorter than black wave 1, black wave 5 must be shorter that black wave 3 was. This is due to one of the three rules of Elliott: “Wave 3 cannot be the shortest of waves 1, 3, and 5”. So, black wave 5 cannot reach $31.24, if my placement of the black 1, 2, and 3 labels on the weekly chart is correct.
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