Large Scale Elliott and Fibonacci Insights on GE

May 2, 2009: 11:33 AM CST

Conglomerate General Electric (GE) has shown fascinating confluence via Elliott Wave and Fibonacci (as well as “Measured Move”) analysis.  Let’s see what I mean and start the count from 2000 to present on the monthly chart.

First, let’s see the simple AB=CD “Measured Move” (aka large bear flag) that has just hit its target:

I’m using TradeStation’s Fibonacci Extension Tool (see my educational post “How to Project a Flag’s Measured Move“) to arrive at a final target.  I start with the 2000 high, draw to the 2003 closing log and then draw up to the 2007 closing high.  TradeStation (or your charting program) then “projects” key Fibonacci retracements as in the 38.2%, 61.8%, and – most importantly for projecting a ‘measured move,’ the 100% (or equality).  You’re most interested in this number (roughly $5.77).

Notice how price hit this level virtually to the penny and began its current reversal to the upside, having achieved its Price Projection Target.  These levels often become support as shorts cover and investors buy-in to establish a low-risk position.

The implication is that the $5.77 level (price has since doubled off that low) will hold as key (if not long-term) support.

Next, let’s look at a possible Elliott Wave count that supports this assumption:

Let’s combine the “Measured Move” and a possible Elliott Wave Count.  Elliott purists might say that the Wave A counts best as an ABC X ABC wave down instead of the 5-wave structure I’ve labeled, but I wanted to try to stay true to the “Zig-Zag” potential large-scale “ABC” pattern.

In a Zig-Zag, A subdivides into 5-waves; B subdivides into 3 waves; and C subdivides into 5-waves.

The way I’ve labeled it here places us in Wave 4 up of (C), hinting that a 5th wave is yet to come perhaps to truncate about the $5.77 level, but one could also argue that the 5-wave C count is complete at the lows.  I’ve chosen to label (not shown) an “extended 3rd wave” so be aware that it is open to interpretation as to the exact count.

If I had to make a bet, I’d say that the $5.77 level will hold because it is part of the larger AB=CD pattern (in that the downward price swing from 2000 – 2003 is exactly equal to that of 2007 to 2009).

I wanted to show you these two insights and give a little interesting take on General Electric’s (GE) ‘bigger picture’ technical structure going forward.

Corey Rosenbloom, CMT
Afraid to Trade.com

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3 Comments

3 Responses to “Large Scale Elliott and Fibonacci Insights on GE”

  1. Bob Says:

    Corey,
    Do you think government intervention in the form of central bank actions and stimulus spending can directly change the investor behaviors which underly Eliot Wave patterns, the result non-conforming patterns?

  2. coreyrosenbloom Says:

    Bob,

    Sure, nothing is certain in the market and there is no methodology (I'm aware) that has 100% accuracy (or even close), so government intervention and the ripples it creates across markets could certainly challenge the way we look at markets both from a fundamental and technical analysis perspective.

  3. Corey Rosenbloom, CMT Says:

    Bob,

    Sure, nothing is certain in the market and there is no methodology (I'm aware) that has 100% accuracy (or even close), so government intervention and the ripples it creates across markets could certainly challenge the way we look at markets both from a fundamental and technical analysis perspective.