Analyzing a Swing Trade: The Rise and Fall of GE Stock

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General Electric (GE), once an omnipresent conglomerate spanning various industries, emerged as an attractive prospect for swing traders. However, this swing trade proved to be short-lived, raising questions about what contributed to its brevity.

Understanding GE’s Evolution:

GE, once synonymous with diverse products from lighting to locomotives, underwent significant restructuring, focusing on health care, energy, and aerospace. The company’s transformation garnered investor interest, with the stock surging by nearly 80% at its peak.

The Swing Trade Opportunity:

As the landscape of GE’s market presence evolved, a promising opportunity for a swing trade emerged. The market, although relatively stable, witnessed GE stock forming a flat base marked by a minor 9% correction. Notably, throughout this phase, the stock consistently found support at the 50-day moving average.

Seizing the Moment:

Recognizing the potential, a swing trade was initiated, adding GE stock to SwingTrader. The market was somewhat uncertain, but the rally was intact. The trade commenced from a bounce off the 50-day line, aligning with a cautious but optimistic market sentiment.

Navigating Challenges:

Despite an initially positive trajectory, GE stock encountered challenges. Daily closes were consistently in the lower trading range, hinting at possible struggles. This was a period of market turbulence as major indices fell below their 50-day moving averages.

Adaptation and Exit Strategy:

As the market took a downturn, quick adjustments were imperative. A crucial warning emerged as GE stock exhibited a notable spread between its high and low, coinciding with an outside day close. Simultaneously, the overall market outlook shifted to a ‘market in correction,’ prompting a necessity for a lower risk tolerance approach.

Swift Exit for Preserved Gains:

To mitigate losses and preserve gains, we swiftly executed an exit strategy. We sold GE stock early in the session after it breached the 50-day line, aligning with our strategy of reduced exposure in an unfavorable market.

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