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Analyzing AES’s Valuation and Bright Upside Potential

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Part 2
Analyzing AES’s Valuation and Bright Upside Potential PART 2 OF 6

Do AES’s Chart Indicators Hint at More Downside?

Chart indicators

AES (AES) stock appears to be weak. Currently, it’s trading 4% and 7% below its 50-day and 200-day moving averages, respectively. The fair discount to both its moving average levels highlights weakness in the stock. In the short term, AES expects that its levels near $11.50 and $11.90 might act as resistance.

Moving averages show that when a stock price rises above or falls below a particular moving average, it’s a bullish or bearish sign, respectively.

Do AES’s Chart Indicators Hint at More Downside?

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Relative strength index

Currently, AES’s RSI (relative strength index) stands at 36. The RSI is a momentum indicator comprised of values between 0 and 100. Movements below 30 are in the “oversold” zone, while movements above 70 are in the “overbought” zone. Extreme RSI levels could indicate an imminent reversal in the stock’s price.

Short interest

Short interest in AES fell nearly 2% on February 15, 2017. The total shorted shares in the company were 7.45 million on January 31, 2017, and fell to 7.32 million by mid-February 2017. A fall in short interest can mean that fewer investors expect the stock to fall in the near term.

Remember, short interest indicates the number of a company’s shares that have been sold short and haven’t been covered. The number also helps track investor sentiment.

Read Can Southern Company Overcome Its Newest Challenges? to learn what’s happening with Southern Company (SO)—another utility giant.

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