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Are Water Utilities Really a Smart Long-Term Investment?

PART:
1 2 3 4 5 6 7 8 9 10 11 12
Part 9
Are Water Utilities Really a Smart Long-Term Investment? PART 9 OF 12

Where Is American Water Works’ Stock Heading?

Chart indicators

The $13-billion American Water Works (AWK) is currently an investor favorite among water utilities (CGW). On November 11, 2016, AWK was trading at a 1.5% discount to its 50-day and 200-day moving averages. This level is likely to act as a resistance for the stock in the short term, though it may turn bullish once the stock crosses above these moving averages.

Where Is American Water Works&#8217; Stock Heading?

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Moving averages can be analyzed in two ways. The first method is price crossover. The second is by using two or more moving averages. The first method shows that when a stock price rises above a particular moving average, it’s a bullish sign, and vice versa. But according to the second method, when a shorter moving average crosses over a longer moving average, it’s a “buy” signal for the stock.

Relative strength index

The RSI (relative strength index) of American Water Works is currently 49. RSI is a momentum indicator made up of values between 0 and 100. Movements below 30 are considered to be in the “oversold” zone, while movements above 70 are considered to be in the “overbought” zone. When the RSI indicator is at extremes, it can hint at an imminent reversal in a stock’s price.

Short interest

According to a recent report, short interest in American Water Works rose nearly 1.5% on October 31, 2016. Total shorted shares in AWK totaled 3.86 million during mid-October. They rose to 3.91 million on October 31, 2016, which could mean that more investors were expecting a downside for AWK at current levels.

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