The market’s big swing from oversold to overbought — plus, the GE Vernova bull case
Every weekday, CNBC Investment Club with Jim Cramer publishes Homestretch, an actionable afternoon update just in time for the final hour of trading on Wall Street. Market movements: It was a relatively quiet session for the market on Thursday; The S&P 500 is trading in a tight range. If the index ends the day in positive territory, it would post an eighth consecutive gain in the last nine, going back to Nov. 21, when New York Fed President John Williams revived hopes for a rate cut at the central bank’s policy-making meeting in December. Next week’s rate cut will be the third of the year. Since Williams’ comments, the S&P 500 has risen nearly 5% and is trading near its record close of 6,890.89 on Oct. 28. The recovery has been so sharp that our reliable technical momentum indicator, the S&P Short Range Oscillator, went from flirting with oversold territory at minus 3.73% on November 20 to overbought at positive 4.06% now. Wednesday is approaching. The current overbought situation of the market is still moderate enough and could resolve itself through rotation, but we could ease another position or two if the Oscillator becomes more severely overbought. An Oscillator reading of 4% or above indicates overbought. Oversold reading of low signals at minus 4%. Every time we mention the oscillator, we are met with requests from Club members: “How can we access it?” We went straight to the source, our partners at MarketEdge, the data provider that publishes the Oscillator. We’re excited to share that club members can now receive a special discount on this helpful tool. Click here . What to expect: We’re starting to see a group of analysts release previews of GE Vernova’s investor update next Tuesday at 4:30 PM ET. We will likely listen to management’s 2025 update guidance, provide an outlook for 2026, and update the long-term 2028 outlook. In the company’s investor update last December, management targeted $45 billion in revenue by 2028, with 14% adjusted EBITDA margins and $14 billion in cumulative free cash flow from 2025 to 2028. Given recent power orders at the company and demand expectations for gas turbine and electrification products and services, many analysts expect management to raise its 2028 outlook. How high? Analysts at Deutsche Bank wrote on Monday that they predict 2028 revenue guidance will rise from $3 billion to $48 billion, adjusted EBITDA margins will rise to 16% and cumulative free cash flow will rise to $18 billion. Deutsche Bank said those targets would still be below the consensus of about $53 billion in sell-side revenue in 2028, with adjusted EBITDA margins of 17.8%. Analysts are happy with this call because the management is conservative and wants to leave room for the rise. “While we don’t foresee too many major surprises in the face of buy-side expectations, we think the bullish message for 2028 will be enough to keep the bull case alive and well,” Deutsche Bank said. GEV YTD mountain GE Vernova YTD GE Vernova shares performed well ahead of the event. Thanks to Thursday’s roughly 5% rally, the stock has gained nearly 13% over the past two weeks and is approaching its record close of $664.55 set in early August. Shares of GE Vernova have nearly doubled year to date. Next up: Hewlett Packard Enterprise, Ulta Beauty, DocuSign, Rubrik and SentinelOne report earnings after the closing bell on Thursday. Victoria’s Secret reports quarterly results ahead of Friday’s launch. On the data side, on Friday morning, the long-delayed September PCE index was released. It is the Fed’s favorite measure of inflation. The University of Michigan also releases consumer confidence and inflation expectations data for December. (See here for a complete list of stocks in Jim Cramer’s Charitable Trust.) When you subscribe to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trading alert before buying or selling a stock in his charitable foundation’s portfolio. If Jim talked about a stock on CNBC TV, he waits 72 hours after issuing the trading alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH THE DISCLAIMERS. NO CIVIL OBLIGATIONS OR DUTIES EXIST OR SHALL BE RESULTING FROM YOUR RECEIVING ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULT OR PROFIT CAN BE GUARANTEED.
