Is GE a Predictor of the Market?

GE is the only original stock left in the DJIA.

By Investopedia
The Dow Jones Industrial Average was created in 1896 by Charles Dow and originally consisted of 12 companies: American Cotton Oil, American Sugar, American Tobacco, Chicago Gas, Distilling & Cattle Feeding, General Electric, Laclede Gas, National Lead, North American, Tennessee Coal and Iron, U.S. Leather pfd. and U.S. Rubber. At the time, these companies represented each sector of the market and thus the Dow Jones illustrated the overall performance of the market in the United States.

At the end of a recession created by the collapse of Philadelphia and Reading Railroads in 1893, these companies represented the stronghold of the United States. Even with the trouble from the railroads, coal remained the dominant fuel for transportation, while gas and electric were growing in demand. Crops were a major export and source of revenue for the economy, while also providing sustenance.

As the country's industrial age came to a close, electricity became the dominant energy source that led to numerous technological advancements. The economy shifted toward providing more consumer goods. With these changes, all but General Electric ceased to exist. In 1929, the Dow Jones was expanded to include the 30-company list known as of August 2014. The 30 companies have changed over the years, but the index still represents a wide section of the U.S. market. However, with so few companies listed in the index, it can only truly reflect about a quarter of the overall market. Even with this small list, the DJIA is still able to accurately reflect trends across the broad market.

 

By JustSignals

With this being said, and the stock market looking like it is laboring, below please find a monthly chart of GE for your review.

As we noticed, there are caution signs.  Similar indicators are falling now as they did in the DotCom and Financial Crisis time frames.

Take a look.  In each of the red circle areas, the price dropped below the MA's, MACD was on a sell signal and the histogram went below zero.  At other times, all three did not occur.

Is this going to be another sign that the stock market going to be in trouble in the months ahead?

Courtesy of Worden Bros.

Keep following JustSignals using Twitter, @StockTwits or Follow By Email. Just submit your email address in the box on the Blog homepage. This has been posted for Educational Purposes Only.   Do your own work and consult with Professionals before making any investment decisions.  Past performance is not indicative of future results