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Understanding FirstEnergy’s Technical Indicators and Short Interest

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Sep. 28 2016, Published 3:15 p.m. ET

Technical indicators

Competitive utility stocks had a relatively rough ride this year, largely due to low wholesale power prices. But FirstEnergy (FE) was seen gaining momentum in the past few trading sessions, given the Fed’s interest rate status quo. As of September 27, 2016, the company was trading on par with its 50-day and 200-day moving averages. The stock’s sustenance above or below these moving averages will determine the FirstEnergy’s movement ahead.

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

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Relative strength index

FirstEnergy’s RSI (relative strength index) is currently at 51. RSI is a momentum indicator made up of values between 0 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.

Short interest

According to a recent report, short interest in FirstEnergy rose an alarming 9.4% as of September 15, 2016. Its total shorted shares on August 31, 2016, were slightly above 8.6 million, but the number surged to 9.4 million on September 15. The increase in the short interest may signal that investors are expecting a significant downside in FirstEnergy from its current levels.

Peer Exelon (EXC) is currently trading at a 2% discount and a 3% premium to its 50-day and 200-day moving averages, respectively. By comparison, Public Service Enterprise Group (PEG) is trading at a 2% discount to its 50-day and 200-day moving averages.

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