Optimism is building around General Electric's stock.<\/p>\n
Several research firms turned positive on the industrial play in recent weeks, with Citi reiterating its buy rating on Thursday and Goldman Sachs naming the stock a top idea on Tuesday.<\/p>\n
GE now has 13 buy ratings, nine hold ratings and no sell ratings, according to FactSet.<\/p>\n
Now that GE has broken through a key area of resistance, it does appear to be setting up for a leg higher, TradingAnalysis.com founder Todd Gordon told CNBC's "Trading Nation" on Thursday.<\/p>\n
"Since the end of 2018, this $12.50-13 zone has kind of defined an area of interest and it looks to me that we've broken above it, now using it as support," Gordon said.<\/p>\n
GE ended trading at $13.48 on Thursday.<\/p>\n
With $12.25 defining the bottom of GE's new floor of support, the stock is likely to move up from here, Gordon said.<\/p>\n
"If GE were to make a move higher into earnings, which are coming up here on July 27, that could be a good jumping-off point here," he said, adding that if GE maintains its strength through any decline in U.S. Treasury yields, that will be an equally strong indicator.<\/p>\n
Gordon, who said he added GE to his personal portfolio on Wednesday, suggested a way to play GE earnings using the options market.<\/p>\n
His strategy was for the options expiring on July 30: "buying the 13.50 call, selling the 15 call, a $1.50 call spread for which you'll pay 37 cents, so, a really nice reward-to-risk ratio there in GE," he said.<\/p>\n
That represents a bet that GE shares could rise between 11% and 22% by the trade's expiration.<\/p>\n