A recent story in the WSJ described how shifting its 85,000 employees to a high-deductible medical plan has had a negative impact on one of GE’s core businesses: medical imaging. Employees are getting far fewer scans because their out-of-pocket costs are so much higher, with a material effect on imaging-equipment sales. But not on the stock, evidently, since it is up 50% since January. We can attempt to short it nonetheless because the rally is approaching a fetching Hidden Pivot target at 23.70. Accordingly, and just for the hell of it, I’ll suggest getting short by buying four Nov 23 puts if the stock gets within 2 cents of the target. Stop yourself out if GE subsequently trades for 23.82 or more. I’ll update my guidance if this order fills, so check back intraday if warranted. ______ UPDATE (September 28, 1:20 a.m. EDT): I’m still in love with the idea of shorting the stock at 23.70 target, notwithstanding the viciousness of yesterday’s short squeeze. There are some changes in my instructions, however: 1) Raise the stop-loss to 24.20; and, 2) buy Nov 24 puts instead of Nov 23 puts. My guess is that they’ll be selling for around 0.80 with GE at or near the target. ________ UPDATE (October 11, 3:29 a.m. EDT): Like a whole bunch of other important stocks that have turned lower without having quite reached their respective Hidden Pivot rally targets, GE’s latest rally has failed 52 cents shy of where we’d hoped to short the bejeezus out of it. The bearish implications would be compounded with a print over the next two days beneath the 22.07 low recorded on September 26.
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Tuesday, August 1, 2017
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