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Sellers of mega blue chip General Electric (GE | Quote | Chart | News | PowerRating) are dominant in active pre-open and early regular session trading on the heels of a surprisingly weak earnings report from the conglomerate.
GE reports Q1 EPS of $0.44 per share, below Street expectations of $0.51 pe share. Revenue was $42.2 bln, worse than the Street view of $43.6 bln.
The company lowered its full year EPS guidance to a range of $2.20 to $2.30 per share, below the Street view of $2.43 per share.
Q2 EPS is seen at $0.53 to $0.55 per share, vs. expectations of $0.58 per share.
Traders have sold off shares in early trading to $32.60, a level not seen since June, 2006. Using history as a guide, it may be time to take advantage of the fear. GE is recently favoring a narrowing trend between the sessions, cutting back its pre-market earnings-driven percentage performance in the following regular session in three of the last four quarters.
On Jan. 18, 2008, GE advanced 2.3% in pre-market trade after meeting Q4 expectations and maintaining its 2008 guidance largely in line with the Street view. The stock added to its upside in the following regular session, gaining 3.3% by the closing bell.
On Oct. 12, 2007, GE lost 1.5% in pre-market trade after the company met Q3 earnings expectations, beat on sales and guided for its Q4 and full year earnings in line with the Street view. The stock saw its declines reverse slightly during the regular session, closing out that day's trade down 1.3%.
On July 13, 2007, GE advanced 1.6% in pre-market trade after the company beat by a penny on earnings and set forward guidance in line with expectations. It narrowed its upside in that day's regular session, rising 1.2%.
On April 13, 2007, GE gained 1.1% in pre-market activity after reporting quarterly results that matched estimates and setting its outlook in a range that straddled the Street view. The stock saw its upside cut back between the regular session bells as GE ended the day with a 0.5% gain.
It isn't easy going long with so much negative sentiment out there, but therein lies the reward.
Brooks McFeely is widely regarded as the leading expert on extended-hours trading. He is a Managing Partner for Brochet Capital Partners, LP and the founder of Midnight Trader, Inc. (www.midnighttrader.com), the leading provider of pre-market and after-hours trading analysis and news to retail and institutional investors.
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