Is a Trend Change in the Offing for Southwestern Energy?



Southwestern Energy stock

Southwestern Energy (SWN) stock rose 7% from $4.42 on May 14 to $4.73 on May 21.

Two weeks ago, SWN moved above its 50-day moving average. Last week, SWN capitalized on this positive technical posture and rose on four out of five days. On May 17, SWN marked a higher high on the daily chart, indicating the possibility of a trend change for the stock.

Year-to-date in 2018, SWN stock has fallen ~15%. In the last week of January, SWN fell below its critical support level of $4.90 on heavier-than-average 30-day volumes. This is the same level that caused the September 2016 to October 2017 sell-off in SWN stock. Interestingly, this is also the level that provided support to SWN to stop its fall from May 2014 to December 2015.

As of May 21, SWN’s 50-day and 200-day moving averages stand at $4.36 and $5.10, respectively, whereas SWN is trading at $4.73.

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Natural gas moved up

Last week, natural gas prices fell ~1%. Natural gas fell from $2.84 per MMBtu (million British thermal units) on May 14 to $2.81 per MMBtu on May 21. Currently, natural gas prices are consolidating just below their 200-day moving average. As of May 21, natural gas’s 50-day and 200-day moving averages stand at $2.74 and $2.88, respectively, whereas natural gas is trading at $2.81 per MMBtu.

Despite lower natural gas (UNG) prices last week, the First Trust Natural Gas ETF (FCG) rose ~4.1%. FCG represents an index of energy stocks that derive a substantial portion of their revenues from the exploration and production of natural gas. SWN outperformed FCG last week.

In the next article, we’ll look at SWN’s correlation coefficient with natural gas prices.


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