GE Sets The Tone

General Electric (GE) came out this morning with disappointing earnings and lowered their outlook going forward.  It appears as though this will hurt the market today, at least at the open.   The stock looks to open down almost $4.  They typically don’t miss their estimates like this.  It’s one of the easier stocks to anlalyze as far as earnings. 

Why would one stock impact the market this way?  General Electric (GE) is a very good proxy for the entire economy.  When you own GE, it’s like buying a mutual fund.  They have so many businesses in so many different areas.  To me, probably the best company in the world.

A couple of things stand out to me regarding GE.  First, their business was hurt by the financial part.  Not a big shock.  But, they didn’t execute in other areas.  As a holder of GE, I’m disappointed.  But, if this level holds, there’s a good chance I’ll be adding to my position.  Their global infrastucture business is still solid.  They were hurt by a weak economy, the financial crisis, and lack of execution on their part.  I believe all three are fixable.  I’m not shocked by the financial crisis impact on GE or the weak economy, but the lack of execution in certain areas is a shock to the market and myself.

When there is low volume and and weak demand as we’ve had this week, the bad news can bring back in volume.  Unfortunately at the open, it’s down volume.

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