27 Dec

Edison International Fell 7% Due to Possible Wildfire Liabilities

WRITTEN BY Vineet Kulkarni

Edison Internation hit a new 52-week low

Edison International (EIX) stock fell more than 7% to a new 52-week low on December 21, 2017. It fell due to concerns about wildfire damage liabilities. Last week, the utility reported that the current probe’s findings include the possible role of its own facilities in causing the wildfires.

On December 20, 2017, PG&E (PCG) suspended its quarterly dividends considering the potential liabilities arising from the wildfires. PG&E stock has fallen nearly 40% in 4Q17 due to speculations about its possible involvement in causing the wildfires.

Edison International Fell 7% Due to Possible Wildfire Liabilities

Chart indicators

On December 21, 2017, Edison International stock was trading 18% below its 50-day moving average and 20% below its 200-day moving average levels. The huge discount to both of these key moving average levels underlines the weakness in Edison International stock. Going forward, its 50-day moving average level around $77.27 is expected to act as a resistance to the stock. Currently, it’s trading at $63.31.

Relative strength index

Edison International stock is trading in the “oversold” zone with its RSI (relative strength index) at 20.

When the stock’s RSI falls below 30, technical analysts consider the stock to be trading in the “oversold” zone. When the stock’s RSI rises above 70, the stock is considered to be trading in the “overbought” zone. RSI levels at extremes might indicate a reversal in the stock’s direction.

Edison International has fallen more than 18% YTD (year-to-date), while the Utilities Select Sector SPDR ETF (XLU), which tracks S&P 500 Utilities, has risen more than 8% during the same period. The SPDR S&P 500 (SPX-INDEX) (SPY) has risen 19% YTD.

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