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What's GE's Real Problem?

For the most part, traders continue to respond to the strong earnings for a second day in a row. Banks are still underperforming but tech, commodities and industrials earnings in the past two days have pushed the S&P 500 and the Nasdaq to within 1 percent of new highs.

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Many of the stronger earnings reports come on big growth overseas. We saw that with YUM (YUM), Dupont , McDonalds and others.

It's not a uniform reaction: General Electric* started up at the open and in 10 minutes lost 5 percent (!), has been down about 2 percent all day. Volume was well over 80 million shares at 1pm ET, more than twice normal volume, most of it in the open.

Why the GE selloff? Some complained that it wasn't really a "clean" beat because there were 6 extra selling days in the quarter, or there was a 3 cent gain from Garanti (a Turkish bank).

This is nit-picking: the real problem with GE seems to be very little organic growth; Honeywell and United Technologies had strong organic growth, whereas GE did not. On the plus side, the company raised its dividend again, GE Capital was strong, and the outlook was positive.

More evidence of the volume slowdown: I noted the continuing anemic volume yesterday...Etrade (ETFC) said trading volumes have been down 5 percent in April and Nasdaq reported strong earnings, in line with expectations, but several analysts, including Sandler O'Neill, lowered FY estimates on lower volumes for stock trading. So it's not just high frequency traders doing less trading, retail guys are lowering their trading levels as well.

Wells Fargo is estimating stock volume will be down 17 percent in 2011 from 2010.

* General Electric retains minority ownership of NBCUniversal, CNBC's parent company.

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