What's Next For General Electric's Stock? Here's A Technical Take

General Electric Company GE stock has come alive in the past week, gaining more than 16.6 percent as the stock looks to close out another horrendous year on a high note. The recent move has even been enough for some bearish technical analysts to change their tune on GE in the near term.

Calling The Bottom

On Tuesday, Miller Tabak analyst Matt Maley told CNBC GE may now have a bit of room to run on the upside. In November, Maley correctly predicted GE's stock would bottom at around $6.66, matching its 2009 financial crisis low.

“If you look at the long-term chart, it is very nice that we were able to hold that 2009 low, and that should limit the downside at least over the near term. However, we’re going to have to see a lot more work and a lot more action in this stock before we can say the worse is behind it for sure,” Maley said.

Building A Base

Maley said GE traders need to see the stock break a few key resistance levels before a bottom is confirmed, but GE's stock has tanked so far so fast that most of its key resistance levels are still way above its current share price. In the near term, GE bulls should be looking for the stock to trade mostly sideways in the $7 to $8 range to build a strong technical base for a potential future recovery and boost investor confidence in the stock.

It may ultimately take a positive fundamental headline about GE’s business to launch a potential long-term recovery above $8. Wednesday’s rally was driven by news that the company has filed paperwork in preparation for a spin-off of its healthcare business. CNBC reported sources say the potential spin-off IPO would likely come sometime in mid-2019.

Levels To Watch

It remains to be seen whether or not the health care spin-off could be the positive catalyst GE investors have been waiting for for years. In the meantime, traders will be watching several key technical levels in the chart.

Near-term support in the past five days has been the $7 level, with the critical long-term support remaining at $6.66. In terms of near-term resistance levels, GE once again failed to break above $8 in early Wednesday trading after failing to do so twice in late November. The 50-day simple moving average sitting at $9.31 would be the next potential technical resistance level to clear following a breakout above $8.

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