[GE] update

As the backlink shows, for some time now I have been working off of an incorrect model for GE.  That is not to say that I have suddenly become bullish on GE and in fact, far from it.  I still hold my Jan 2016$13 puts and I plan to buy deep out of the money Jan 2017 puts as well, probably at double the amount of contracts as I initially purchased.  Despite the recent share price surge, I maintain that GE is in serious trouble and that it will begin to plummet hard over the next 18 months with a non zero chance of being broken up in BK court.

I have been using the parallel falling channel model for GE on the linear scale for some time now even knowing that the log scale showed that there was room for another potential rally to new highs.  So now I am flipping over to monitor GE only on the log scale which shows that it has peaked or very nearly so.

Today's "earnings" results from GE (how can a loss of $13.6 billion USD be used in the same sentence as "earnings"...) news is potentially a big catalyst for the coming sell off.   Should be sending fear into the hearts of anyone with money in this vendor finance scam of a company.

Importantly, the engine of its vendor finance scam -it's finance division - has been divested.  It no longer has the ability to borrow money using the name "GE" to get low interest rates on behalf of its customers.  So now they will have to use conventional finance mechanisms which will have much higher rates that are commensurate with the risks that are involved in financing capital equipment.  It means that many of GEs "customers" will simply evaporate because they never could afford to buy the stuff if they weren't getting an artificially sweet deal on the financing.

Zooming in, here is my near term model.  I don't know if it needs one more move up as shown to complete green 5 but once it breaks down below the top rail I think the real selling should pick up very rapidly.  Anyone holding GE long though their reported loss of the engine of their debt pump, falling revenues and in fact a HUGE revenue miss in their "core" industrial businesses and of course, whopping $13.6 billion dollar loss is completely out to lunch IMO.  Management is gutting the company with a dividend of 3.7% based on an overly large payout ratio of 59%.  This is NOT what a company which wants to be around in 2 years does at a time when revenue is falling rapidly.  They should be conserving cash because they have precious little of it in the first place.  They have 16bn cash backstopping 365bn debt.  Rotsa ruck with that when the recession is officially announced.  Mish thinks we are already in one and I agree.  The charts are telling me that soon the herd will figure it out as well.