GE shares are soaring, but at least one technician sees a 'dead cat bounce'

GE is coming off its best week in nearly a decade.

The one-time Dow stock ended Friday with a weekly gain of more than 17 percent, its best since March 2009, after a CEO shakeup last week.

One technical analyst says this rebound could prove nothing more than temporary.

"Let's call it a fundamental reshuffling and you're getting a technical dead cat bounce from this," Bill Baruch, president of Blue Line Futures, told CNBC's "Trading Nation" on Friday.

A "dead cat bounce" is when a stock sees a short-lived rally following a sharp and sustained decline. At its lows in late September, GE was 55 percent off its 52-week high set last October. Even after last week's gains, it remains 46 percent from that high.

This recovery could turn into a bigger breakout if it can break through one key technical level, according to Baruch.

"What I would say is more than just a dead cat bounce would be a move above its 200-day moving average at $14.14," said Baruch. "If that does [happen], you could see a rise back to about unchanged on the year."

GE would need to rally 7 percent to break through its 200-day moving average at $14.06. A move back to unchanged for the year at $17.45 represents a 32 percent rally from Friday's level. The stock was up nearly 2 percent at $13.44 in Monday's premarket after an upgrade by Barclays.

The embattled industrial giant cut loose CEO John Flannery last Monday, replacing him with former Danaher chief Larry Culp. The change in C-suite leadership swept its shares back up to early August highs.

One market watcher says the fundamentals haven't changed enough to support a full recovery.

"The problem is a lot of the problems that investors had with the prior CEO were problems that he inherited and didn't necessarily create," Erin Gibbs, portfolio manager at S&P Global Market Intelligence, said of Flannery.

Culp faces similar issues that plagued Flannery's tenure, Gibbs continued.

He has "some major headwinds facing him, particularly with the asset write-downs and the problems with the power business," she said. "We just don't see that turnaround, and I don't see that a new CEO is going to be that key to turning the ship around just yet."

Flannery held the CEO position for just over a year. From the announcement of his appointment in mid-June 2017 to his dismissal this year, the stock tumbled nearly 60 percent.

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Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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