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What Does the Sharp Increase in NRG Energy’s Short Interest Mean?

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Short interest

Short interest in NRG Energy (NRG) rose 15% on November 15, 2016. The total shorted shares in NRG totaled 20 million at the end of October, rising to 23.1 million on November 15. This increase could indicate that more investors are now expecting a downside from its current levels.

Short interest gives the number of a company’s shares that have been sold short and haven’t been covered. This metric also helps track investor sentiment.

NRG Si

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Chart indicators

On November 25, 2016, NRG Energy (NRG) was trading at a 2% and 14% discount to its 50-day and 200-day moving averages, respectively. The fair discount to these levels highlights any weakness in NRG stock. These moving average levels are likely to act as resistance in the short term.

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

The largest utility by market capitalization, Duke Energy (DUK) was trading at a discount of 5% and 7% to its 50-day and 200-day moving averages, respectively, highlighting its weakness.

Relative strength index

The RSI (relative strength index) is a momentum indicator comprising 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 and can hint at an imminent reversal in the stock price. NRG’s RSI is currently 47.

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