General Electric Follow Up
I just wanted to post a quick follow up (after a well satisfying Pakistani meal). On Friday I was disappointed on the GE stock price performance. Yes they missed revenue, but it's still a solid company. However, one thing I did say was that I felt it would recover back to the prior day's close, and it did! Closed at $19.15, exactly the same as the prior day's close. I'm actually pretty impressed at myself, I firmly believe this company should support a strong stock price, and there is a case for a minimum price of $20.
Let's see in a couple weeks what they do with the dividend. It looks like they may be able to resume the dividend from GE Capital, and this would get passed onto shareholders. This is subject to fed approval, and so it seems somewhat unlikely given what they've done for the rest of financial sector dividends. Based on history, I'm looking for a dividend announcement on the 3rd of February. Even if GE Capital cannot resume their dividend, perhaps they will still give us an extra penny per share. I'm an optimist.
I look forward to seeing where this will go this week, I'm bullish, of course, but it's a low volatility stock and it might hover in the mid-19's for the week before breaking out past $20 next week.
Good luck to all
Market Perspectives for 18 January 2011
We've got mixed news in the markets today, Goldman beat the street, but their numbers were down overall. Enthusiasm from Europe seems to be wearing out, but I think US investors are still very optimistic about a stateside recovery.
Big movers this morning from my watch list:
TTM up 2.5%
DD up 1.65%
MCD up 1.1% (acting a bit volatile in the early session, sputtering up and down between 101.45 and 101.75), looking for a lead back down to closing levels of about 101
GE up 1% (I'm watching this one closely, as it popped pretty big yesterday morning and slowly but surely fizzled out to a loss on the day, opened this morning at a loss and is slowly recovering, looking for it to hit 19 before the close).
Still bullish on GE! Long term bullish on MCD, but looking for a pullback from 52-week high set today. MCD has been setting 52-week highs pretty regularly for the last few weeks, and they always drop from them, expect this to fall back to 101, if not below.
That is all for now, check in later in the day!
Market Perspectives for 17 January 2011
It was an exciting morning, starting off with great numbers from Asia, followed by a European rally on the French bond sale and a buoy in the Eurodollar, then an immediate early morning rally in the US markets. There was great excitement this morning coming off the three day holiday weekend.
Then, around lunchtime, it slowly started to fizzle out as selling pressure began to weigh in. That's the problem with quick pop rallies, they always precede a sell off. If I was holding short bullish positions over the weekend I would take this mornings activity as a godsend opportunity to take profits, and I recon that's what most traders did today. Everything looks pretty beautiful for the first two hours of trading, pulling in lots of buying volume, followed by even heavier selling volume.
My sentiment this week is bullish going into some big names in earnings, and I'm particularly looking forward to GE earnings this Friday. I'm really counting on them to raise the dividend again, even if just a tiny bit. See, a few years ago GE cut back it's healthy dividend and held it steady for a year before slowly raising it. They have been consistent in raising their dividend more frequently than once a year, and I feel that the pace will increase further.
Check here for GE dividend history over the last five years
Now then, my guess is as good as anyone else, since they just raised their dividend payable January 25. However, GE is sitting on a lot of cash and I think their earnings are going to surprise the street, and shareholders are demanding a lot more return for their loyal investment, I know I am. I don't think they have much choice except to raise the dividend, even if only $0.005 or $0.01 per share, every little bit counts for those holding large blocks. My price target here is $20/share after earnings, and higher leading into the next quarter's release.
As for the rest of wall street, the market sentiment for 2012 will be a bit more firm after we get through the next two weeks of earnings, particularly with tech releasing results early in the week, and the big conglomerates next week. Economic indicators are showing improvements, but corporate earnings are the true test of growth. If the big boys can show cash earnings growth then I'll take it as a bullish signal for the next few weeks, until more numbers are released. Options are key in this volatile market, hedge your bets and bet your instincts. Good luck to all
Full disclosure: I am long GE and holding a small position.