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FirstEnergy Stock Trading in the Oversold Zone

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Dec. 27 2017, Published 2:59 p.m. ET

FE stock looks weak

While utilities have been on a losing spree lately, competitive utility stock FirstEnergy (FE) seems even weaker. It has lost more than 12% so far this month. Investors sold utility stocks after they were seen as one of the least beneficial sectors of potential tax cuts.

FirstEnergy stock is currently trading in the oversold zone, considering its RSI (relative strength index) at 14. When the stock’s RSI falls below 30, the stock is said to be trading in the oversold zone, and the stock is said to be trading in the overbought zone when its RSI leaps beyond 70.

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Moving averages

On December 22, FirstEnergy stock was trading 7% below its 50-day and 2% below its 200-day moving average levels. The fair discount to both its key moving average levels highlights the weakness in FE. FE’s 200-day moving average is expected to act as resistance in the short term. It’s currently trading at $30.5.

So far this year, FirstEnergy (FE) stock has fallen more than 2% while the Utilities Select Sector SPDR ETF (XLU) managed to gain 8% year-to-date. The SPDR S&P 500 (SPX-INDEX)(SPY) rose almost 20% in this period.

FirstEnergy’s peer and the largest competitive utility, Exelon Corporation (EXC), is up more than 11% so far this year. EXC stock looks relatively strong, considering its chart indicators. It’s currently trading 4% below its 50-day moving average and 4% above its 200-day moving average level. Exelon is also trading in the oversold zone with its RSI at 20.

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