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Market Extra: Breakdown between Dow, S&P 500 and GE sends an ominous stock-market signal

A bearish breakdown is playing out between the broader U.S. equity benchmarks and General Electric, a key component of the Dow and one of the most storied U.S. companies.

Market technician Tom McClellan pointed out in a late-Wednesday note that when the relationship between General Electric Co. GE, -0.28% valued at about $220 billion, and the Dow Jones Industrial Average DJIA, -0.53% where it is among one of 30 components, erodes, it is usually bad news for the broader market.

As the chart below (with the Dow in blue and GE in red) shows over a roughly two-year period, the pair tends to move in lockstep, exhibiting what is referred to as a positive correlation—moving in the same direction at the same time.

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