[GE] looks ready to gap down

I'm going to try something new in the titles since I'm sometimes having a difficult time finding the posts for a given stock.  [XXXX] in the post title simply means Ticker XXXX.  So [GE] means the post is primarily about General Electric.  Note: The original post used a different convention but on suggestion from reader TJ it was changed to use the "[]" scheme.

In any case, here is the back link to the prior GE update. The model is holding well so far.  It expected a small wave up, likely to the 38.2 or maybe the 50 fib.  We got that wave and it took the unmistakeable shape of WC.  That tiny little spike up to close out WC was about 1 tick long.  In other words, nobody got out there, it just happened and then fell into collapse.  To say this is weakness is a gross understatement.  Shareholders want out of this POS folks.  They want out badly.  If I'm right then this will express itself as a gap.  Of course, this is not an EW requirement but it would show that I have an excellent working model for these shares.  Importantly, GE is so big that when it starts selling off on no news it is going to get the herd's attention and the herd is already nervous which is what all this volatility we see happening is trying to tell us.

I want to say for future readers that the selling that appears likely about to happen will not have been done by short sellers.  The short hedge funds have gotten creamed and they got thrown out of the game a long time ago.  The likes of Hugh Hendry have gone long because of the pressure to make returns.  And not just 100%, 107% because he thinks he is now going to play catch up.  This will end badly for him.  He was one of the last short holdouts and his capitulation marked the beginning of the end for the bull market IMO.

No, folks don't blame the shorts for this.  Blame the leveraged longs who can no longer justify taking on more margin debt to borrow shares with.  I say "borrow shares" because if you use debt to "buy" them, you really don't own it.  You are borrowing it until you pay it off if such time ever arrives.

This reminder is specifically directed at those misguided individuals who were mad at me 2007-2009 for making bank by short selling.  They said that shorting should be outlawed and thought it was evil. Of course they were just responding to herd-think instead of realizing that if people had not been allowed to use margin debt in the first place that there would be no bubble.  The real culprit is the use of margin debt in order to game the markets with, not short sellers.  We are a tiny fraction of the market.  Go piss on Wall Street for what is likely about to transpire.