Is General Electric a Buy After Its Earnings Beat?

-- General Electric is trying to rally after beating on earnings. Here are the must-know technical levels. --

By Bret Kenwell, TheStreet.com

Shares of General Electric (GE) were rallying on Tuesday, up about 1.5% after reporting earnings.

Now that may not sound too impressive - 1.5% is hardly anything to get excited about.

That's true. But on a day when the Nasdaq is down about 2% and the S&P 500 was down about 50 points at its low, a 1.5% gain feels a bit better.

However, investors want to know if GE will be good for more than just a day.

What more can the company do, though? GE beat on earnings and revenue expectations while giving a boost to its industrial free cash flow forecast.

Cash flow has been at the root of investors' worries, so to see this metric improving has to be bringing some sense of reassurance to the bulls.

While General Electric has been consolidating for the last few months, so have others in the group, like Honeywell (HON) and 3M Co (MMM) - the latter of which is down slightly on earnings.

Trading General Electric Stock

Daily chart of General Electric stock

Chart courtesy of TrendSpider.com

There are pros and cons when it comes to GE's chart. First, I love the way shares burst over the $12.25 area and then continued to find that level as support.

While GE did waver below that mark earlier this month, it was only for a day as shares quickly rebounded to the upside.

With Tuesday's action, shares are reclaiming the 20-day moving average and clearing downtrend resistance. However, that 50-day moving average remains a bit troublesome.

For GE to have a nice rally, we need to see the stock take out the 50-day moving average. If it can, that puts the July high in play at $13.63, followed by range resistance near $14.40.

Should shares go on to clear that level, the $16.50 to $16.75 area may be on the table.

On the downside, let's keep an eye on the post-earnings low and the 21-day moving average. To lose both of these marks could put a retest of the $12.25 level in play, along with the 200-day moving average.

From TheStreet.com