Southern Company underperformed its peers

Southern Company (SO), one of the largest regulated utilities, continues to trade weak despite the recent strength in utilities at large. Southern Company stock has lost almost 8%, while the Utilities Select Sector SPDR ETF (XLU) has risen ~4% in 2018.

Currently, Southern Company stock is trading at $44.29—nearly 5% and 3% below its 50-day and 200-day moving average levels, respectively. The fair discount to both of these levels highlights the weakness in the stock. The moving average levels around $46.51 and $45.55 are expected to act as a resistance for Southern Company stock in the near future.

Southern Company’s Chart Indicators and Short Interest

Relative strength index

Southern Company’s RSI (relative strength index) is at 42. A stock is considered “oversold” when its RSI drops below 30 and “overbought” when its RSI rises above 70. Extreme RSI values could suggest an impending reversal in the stock’s direction.

Short interest

The short interest in Southern Company stock decreased 12.0% on August 31. On August 15, the shorted shares in Southern Company were 36.1 million. Southern Company’s total shorted shares decreased to 31.9 million on August 31.

A decrease in the stock’s short interest could mean that fewer investors expect Southern Company to fall from its current price level. The short interest indicates the number of a company’s shares that have been sold short and not yet squared off.

Duke Energy (DUK) stock was relatively better than Southern Company. Duke Energy has lost 2% year-to-date and underperformed broader utilities (IDU). Currently, Duke Energy is trading above its 50-day and 200-day moving averages. Duke Energy’s RSI is at 55.

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