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Could Southwestern Energy Be Following a New Uptrend?

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Jun. 5 2018, Updated 3:24 p.m. ET

Southwestern Energy stock

In the last week (May 29–June 4), Southwestern Energy (SWN) stock has risen ~7%. SWN found support at its 50-day moving average, rising four days in a row. On June 4, SWN fell marginally. However, SWN is reaching higher highs and lows, indicating an uptrend.

Currently, SWN is trading below two critical levels, which, if crossed, would confirm a new uptrend. The first critical level is $4.90. In the last week of January, SWN lost this very critical support on heavier-than-average volumes. This level also arrested SWN’s September 2016–October 2017 sell-off and stopped its June 2014–December 2015 decline.

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The second critical level to watch for is SWN’s 200-day moving average, which it lost in October 2016. Since then, SWN has failed to regain it three times. Currently, SWN is trading above its 50-day moving average but below its 200-day moving average. On June 4, SWN’s 50-day and 200-day moving averages were $4.40 and $5.07, respectively, whereas SWN was trading at $4.77.

Natural gas moves down

In the last week, natural gas prices have fallen ~1% from $2.96 per MMBtu (million British thermal units) to $2.93 per MMBtu. Currently, natural gas prices are consolidating just above their 200-day moving average. On June 4, natural gas’s 50-day and 200-day moving averages were $2.78 and $2.88, respectively, whereas natural gas was trading at $2.93 per MMBtu. Last week, crude oil (USO) fell ~5%.

Due to lower natural gas (UNG) prices last week, the First Trust Natural Gas ETF (FCG) fell ~0.7%, underperforming SWN. FCG represents an index of energy stocks that derive a substantial portion of their revenue from natural gas exploration and production. Peers Range Resources (RRC) and Consol Resources (CNX) rose ~2.8% and ~1.5%, respectively, also outperforming FCG. In the next part, we’ll look at SWN’s correlation with natural gas prices.

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