Benzinga’s PreMarket Prep airs every morning from 8 a.m. to 9 a.m. ET. During this fast-paced and highly informative hour, traders and investors tune in to get the top news for the day, the catalysts behind these moves, and the corresponding price action for the upcoming session.
Each day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick as well as producer Spencer Israel.
It is not often that large cap companies reverse split. In most cases, small companies do a reverse split to raise the price of their shares so that they can continue to be listed on a major exchange.
What is an inverted division? This is a corporate action that consolidates the number of existing shares into fewer and proportionately more valuable shares. As a result, it reduces the number of shares available for trading and can be pursued for a number of reasons. As noted above, it can signal a business in distress.
The new GE award: Going back 20 years does not make a pretty picture that is not really different from the old one. Essentially, General Electric (NYSE: GE) is nowhere near the high levels of 20 years ago and may be there again.
After the reverse split, the 20-year high is $ 327.29. The issue hit a new 20-year low in March 2020 when it hit $ 43.84, which is just below the March 2009 low of $ 44.05.
With GE trading in the $ 100 zone, it’s much closer to the all-time low than the all-time high, reflecting the company’s miserable underperformance since the financial crisis.
Price action from reverse split: GE began trading on an adjusted basis on August 2. Interestingly, the show is trading almost at the same level as its closing price of $ 100.60 that day. As a result, there has not been a massive exit from the issue by the large institutional shareholders who are struggling with the issue in their portfolios.
What’s remarkable about the overall price action is that the August 12 reverse post-split high ($ 107.23) was only pennies down from its first session high as a higher priced issue. As a result, with the double-top in place and the problem well fixed, there is an obvious obstacle to higher prices for the problem.
On the downside, the reverse post-split low ($ 98.11) was reached on day two of trading. This level was almost revised during Thursday’s session when the issue hit a low of $ 98.60. Additionally, the show closed from the inverted division ending Thursday’s session at $ 99.42.
Try to be optimistic: Based on Friday’s price action alone, there is a favorable scenario for the show. That being said, he found open support between Thursday’s low and the close at $ 99.10. Since hitting that low, its rally has come just short of Thursday’s high ($ 100.82) as $ 100.67 represents the session high.
Although the low-to-low pair is not as close as the highs-up pair, investors may approach the problem like a trading range stock that has just tested the low of the trading range and has reversed the price. .
This makes the new GE not much different from the old GE, which was dying in narrow ranges doing multiple lows and / or highs in the same area and then reversing … but now at higher prices.
Photo: Momoneymoproblemz via Wikimedia Commons