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Where Will WEC Energy Stock Go from Here?

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WEC stock in the oversold zone

WEC Energy Group’s (WEC) stock hit alarming levels when it entered oversold territory last week. On August 16, its RSI (relative strength index) hit 26.65. It’s been recovering since then and is currently near 40.

The RSI is a momentum indicator made up of values between 0 and 100. Movements below 30 are considered “oversold.” Movements above 70 are in the “overbought” zone.

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Technical indicators

As of August 25, 2016, WEC stock is trading at a 4% discount to its 50-day moving average. The stock has been seeing weakness since it crossed this faster-moving average in early August. On a positive note, WEC is still trading at a 6% premium to its 200-day moving average. The stock may face this level as a support in the short term.

You can analyze moving averages two ways. The first method is price crossover, and the second is using two or more moving averages. The first method shows that when a stock price exceeds a particular moving average, it’s a bullish sign, and vice versa. On the other hand, according to the second method, when a shorter moving average crosses over a longer moving average, it’s a buy signal for the stock.

Utilities losing sheen?

Peer Xcel Energy (XEL) is trading at a 4% discount to its 50-day moving average and a 5% premium to its 200-day moving average. DTE Energy (DTE) is also trading at a 3% discount and a 5% premium to its 50-day and 200-day moving averages, respectively. Notably, these mid-size utilities trading at a discount to their respective faster-moving averages is likely to concern investors. Is this the start of utilities’ long overdue correction?

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