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Analyzing Short Interest in Energy Transfer ahead of Q2 Earnings

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Aug. 2 2017, Updated 1:07 p.m. ET

Moving averages

Energy Transfer Equity (ETE) rose above its historical moving averages, driven by gains after it bounced back from a YTD (year-to-date) low. However, it’s currently trading close to the longer-term moving average (200d). Weakness in crude oil prices or earnings surprises in the coming days might take ETE below its 200-day SMA (simple moving average). On the other hand, ETP is still trading below its short-term (50d) and longer-term (200d) moving averages. This trend might indicate bearish sentiment in ETP. ETE was trading 0.7% above its 50-day SMA (simple moving average) and 3.1% above its 200-day SMA as of July 28. At the same time, ETP was trading 0.7% and 13.1% below the respective historical averages.

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Short interest

Short interest in Energy Transfer Equity was 56.3 million shares as of July 28, 2017. At the same time, Short interest in ETE as a percentage of float ratio was 7.16%. The current short interest in Energy Transfer Equity is higher than the last month’s average of 7.38%, which might indicate bullish sentiment in ETE. However, short interest in ETE is still higher compared to the one-year and three-year averages of 6.20% and 5.41%, respectively. On the other hand, short interest in Energy Transfer Partners of 2.46% is below the one-year average of 2.86%.

Relative strength index

Energy Transfer Equity’s RSI (relative strength index) was 52.27 as of July 28. Energy Transfer Equity is far away from being “overbought” or “oversold.” RSI is a momentum indicator with values ranging from 0 to 100. An RSI value below 30 for a stock indicates that it has entered “oversold” territory, while an RSI value above 70 for a stock indicates that it’s “overbought.” Similarly, Energy Transfer Partners is trading in the middle of the oversold to the overbought range with an RSI value of 48.7.

In the next part of this series, we’ll look at analysts’ recent recommendation for Energy Transfer Equity and Energy Transfer Partners.

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