The man who called GE to $6.66 now sees this ahead

They say you have to dance with the devil to get out of hell, and that might be what just happened with General Electric.

Nearly a decade after hitting its financial crisis low of $6.66, GE touched the ominous level last week — and it's been roaring back ever since.

Matt Maley, equity strategist at Miller Tabak, got it right. He placed that target on GE stock more than a month earlier in his Nov. 9 appearance on CNBC's "Trading Nation."

Now that his call has come to fruition, he sees support for the stock if it can clear several technical hurdles.

"We were able to hold that 2009 low and that should … limit the downside at least over the near term. However, we're going to have to see a lot more work and a lot more action in this stock before we can say the worst is behind it for sure," Maley said Tuesday on "Trading Nation."

GE stock surged 6 percent in Wednesday's premarket to $7.72 a share.

Its share price had more than halved since it began the year as of Tuesday's closing. In just the past three months, it tanked 43 percent. Its swift decline has pushed shares below support levels that could now generate resistance, says Maley.

"The stock fell so far, so fast that any resistance level, for instance, its 50-day moving average and its trend line for 2018, they are much higher than where the stock is now, 25 to 35 percent higher," he said. "When you want a stock to really confirm that the worst is behind it, you want to see it break a few resistance levels."

Maley says he'd need to see the stock form a base in the $7 to $8 range to give him a sign that its slump has come to an end. GE is still a 10 percent rally from the upper-end of that range.

Gina Sanchez, CEO of Chantico Global, says the company could rebound but its turnaround efforts will take time.

"We've seen a pretty big Hail Mary in terms of their determination to restructure the firm and to restructure the outlook for where they're going to put their focus but that's something that takes years to build out," Sanchez said on "Trading Nation" on Tuesday.

GE is in the middle of a years-long restructuring effort that has included shedding some of its peripheral assets such as finance to whittle itself down to its core industrial operations. However, some of its units, such as its power business, continue to weigh on the company.

"For the time being, it has to survive the negative headlines, and a liquidity crunch is not the kind of negative headline that you want to have, an SEC probe is not the kind of negative headline you want to have, so we're not out of the woods," added Sanchez. General Electric said in October the Securities and Exchange Commission was widening its probe of the company's accounting practices.

Videos

Trades to Watch

Trader Bios

About

Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

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 CNBC and 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.

Follow Michael Santoli on Twitter @michaelsantoli

Read more

Connect