PG&E (PCG) stock was leading the broader utilities prior to the fires in California. However, the situation overturned in the last couple of months. PG&E is now trading almost 30% lower year-to-date, while peer utilities (XLU) have risen nearly 8% in the same period.
In the near future, PG&E stock continues to look extremely weak, given a huge discount to its key moving average levels. On December 21, 2017, PCG was trading 19% and 31% lower than its 50-day and 200-day moving averages, respectively. Its 50-day moving average of $54.88 is likely to act as a near-term resistance for the stock. It’s currently trading at $44.50.
Relative strength index
PG&E’s epic fall on December 21, 2017, shoved the stock into the deep oversold zone. Its RSI (relative strength index) is currently near 6, the lowest level in almost two months. The current RSI levels might hint at a recovery for the stock.
According to technical analysts, a stock is considered to be trading in the oversold zone when its RSI falls below 30. It’s considered to be trading in the overbought zone when its RSI rises above 70. Extreme RSI levels might indicate an imminent reversal in the direction of a stock.
You can compare the ten largest utilities (IDU) in An Investor’s Guide: A Look at the 10 Largest S&P 500 Utilities.
Let’s look next at PG&E’s latest valuation.