You may still count on dead money

You probably cannot find a better example than GE as the dead money. This once glory American icon has been in a tailspin for over a year now, crashing from $30 to $15ish as I’m writing. One blow after another has made almost anyone who tries to go long with it frustrated and disappointed. I’m not going to sugarcoat it by painting a bright future for GE at the moment as I truly don’t know what will come next that will surprise everyone. But the thing is, you don’t need to count only on Street darling stocks to make money. From time to time, dead money can also deliver you some quick money if you can spot the right moment. I think we are seeing the moment now for GE. While GE may continue to go down in the months ahead depending on what kind of unknown messes will be discovered, it is not necessary going down in a straight line. Actually the easiest money is often made when there is the extreme pessimism and everyone throws in the towel to give up. We got the moment two weeks ago when GE announced to restate its earnings for 2016 and 2017. The stock tumbled almost 4% due to the news but then it recovered all its intraday loss and actually closed higher for the day. This was a quite bullish price action, suggesting the exhaustion of the sellers at least for the time being. When bad news cannot move a stock down, it often means its bottom is in at least for the near term. I bought some cheap calls then, thinking to get a quick double within 2 weeks. It didn’t exactly but still gave me a quick 50% gain.

Then another bomb dropped again a couple of days ago when an analyst reiterated his target price for GE at $11. The poor GE which just recovered a bit got sold off again and is trading around low $14 now. I’m not going to argue with the analyst for the downside target as it is indeed possible. But based on the price actions and its daily momentum with positive divergence, I think there is some hope for a dead cat bounce. If I’m right I think we may see GE moving up 10-15% first before seeing its $11 in the next few weeks. If so, some quick money can be made as well.  

Again I’m definitely not in for any long term commitment for GE. Rather I’m trading for a dead cat bounce!