CenterPoint Energy (CNP) broke below its 50-day moving average in early August and has been trading weakly since then. It’s currently trading at a 4% discount and an 8% premium to its 50-day and 200-day moving averages, respectively. CenterPoint stock may remain under pressure until it breaks above its 50-day moving average.
You can analyze moving averages in two ways: price crossover and 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.
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 trading at a 3% discount and a 5% premium to its 50-day and 200-day moving averages, respectively.
Relative strength index
CenterPoint Energy’s RSI (relative strength index) is currently 41. It touched an alarming level of 28 on August 16, 2016. Its RSI has been consolidating since then. RSI is a momentum indicator made up of values between 0 and 100. Movements below 30 are considered “oversold.” Movements above 70 are considered “overbought.”
According to the latest report by FINRA (Financial Industry Regulatory Authority), CenterPoint Energy stock witnessed a 14.7% fall in its short interest on August 15, 2016. CNP’s total short interest was 14.2 million shares at the end of July 2016 compared to 12.1 million shares as of August 15, 2016. The large short covering means traders aren’t seeing any substantial downside in CNP from its current levels.