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Where Does Southern Company Really Stand in the Face of 2H16?

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Where Does Southern Company Really Stand in the Face of 2H16? PART 1 OF 9

Southern Company Just Peaked to a 52-Week High

Utilities continue to stay strong

The UK’s “Brexit” decision to withdraw from the EU made utilities even more attractive due to the subsequent volatility in the global markets. Southern Company (SO), Duke Energy (DUK), and NextEra Energy (NEE) have already soared by more than 15% in 2016. Southern Company, in particular, just peaked to a new 52-week high on June 27, 2016, of $52.35, with its short interest falling by nearly 0.8% in mid-June from the level one month ago.

Southern Company Just Peaked to a 52-Week High

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Short interest gives the number of a company’s shares that have been sold short and have not been covered. In turn, it tracks the investor sentiment. The reduced short interest illustrates that investors may have become a bit optimistic over Southern Company than a month ago.

Momentum oscillators

Southern Company is currently trading at 4% and 8% premiums to its 50-day and 200-day moving averages, respectively. The surge in utilities after the UK’s Brexit results has shown that they may have more upside in the near future.

But Brexit is an added worry for global economic growth that could result in further delays in the US Fed’s interest rate hike. The slower-than-expected rate hike has boosted utilities so far this year, and further delays could make them rally even longer.

SO’s RSI

The stock’s climb in 2016 has resulted in a strong rise of SO’s RSI (relative strength index), which currently stands at 70. RSI is a momentum indicator made up of values between zero and 100. Movements below 30 are considered to be in the “oversold” zone, and movements above 70 are considered to be in the “overbought” zone.

Continue to the next part for a discussion of total returns among utilities.

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