General Electric Company GE 0.22% investors are finally getting a chance to catch their breath Wednesday following seven consecutive down days that have the stock on the verge of dipping into the teens for the first time since the 2015 flash crash.
A lackluster earnings report and guidance cut now have investors concerned that a dividend cut is right around the corner, a possibility that Deutsche Bank has repeatedly touted for months.
GE traders had reason for optimism on the day the company reported when the stock opened at a new multi-year low near $22 but then proceeded to rally to close positive on the day at $23.83. This initial rally may have been driven by short covering or speculation that the horrendous report would be the near-term bottom for the stock.
Unfortunately for GE bulls, the earnings day rally was followed by seven consecutive red days that dropped the stock to as low as $19.96 on Wednesday before GE bounced back above $20.
The seven-day losing streak was fueled by a string of Wall Street downgrades and negative comments on the stock from the likes of Morgan Stanley, UBS, Stifel, JPMorgan and others.
The market seems to be pricing in the growing possibility of a dividend cut. At this point, a cut and potential short-term wash-out down into the teens may be the best way for the stock to find a bottom and potentially reset.
In terms of near-term support, the psychological $20 level will be the first potential bottom. A close below $20 would be bad news.
Below $20, the flash crash low of $18 could be…
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