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This morning, Goldman Sachs decided it a prudent move to upgrade General Electric (NYSE: GE) to Buy from Neutral and elevated the stock's price target to $15 from $13 per share. The reason for the upgrade was comments from U.S. House Financial Services Chair Barney Frank. The congressman seemed to indicate that there was support for regulatory reform that would "not mandate the separation of GE Captial."
The brokerage firm now estimates a 25% chance that GE Capital will be separated from GE, which could cost shareholders $40 billion, earlier the estimate was at 50%.
Perhaps such speculations are a good reason to issue an upgrade and price elevation, but I'm not sure that the stocks technical performance indicates a move to $15 is likely anytime soon. The stock's 10-month moving average has currently slipped below the $15 level -- and the shares have not topped this trendline since April 2008.
Looking at the stock's intermediate-term prospects, it is facing resistance from its 20-week moving average. That said, there are signs that this trendline is giving way. Recently, the shares have managed to close atop this trendline, suggesting that the resistance may be weakening. However, the equity's 50-week moving average looms overhead in the $16 region. This trendline could turn away any rally attempts if given the chance.
The stock could receive a push higher from this morning's upgrade, but if it can't parlay the momentum into a push through the overhead resistance, it may take the stock some time to rally.
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