Utilities have been following a downtrend recently, plummeting more than 10% since early last week. One of the top-gaining utility stocks this year, FirstEnergy (FE), is currently trading weakly at $35.80, ~6% and ~1% below its 50-day and 200-day moving averages, respectively. Going forward, $36.10 and $38 could act as a resistance for the stock.
Relative strength index
The RSI (relative strength index) comprise values between 0 and 100. An RSI score below 30 implies a stock is oversold, and a score above 70 implies it is overbought. RSI scores at extremes suggest an upcoming stock price reversal.
Utilities (XLU) (VPU) are currently oversold. The recent sell-off in these defensives brought their RSI score from 80 to 13 in the last ten trading sessions. FirstEnergy’s RSI score of 17 indicates the stock is oversold.
Recently, broader markets’ volatility has increased due to mounting uncertainties. Implied volatility represents investors’ anxiety. On December 24, FirstEnergy’s implied volatility was ~23%, notably higher than its 15-day average. The Utilities Select Sector SPDR ETF (XLU), which represents the country’s top utilities, had implied volatility of ~19%—also higher than its 15-day average. The S&P 500’s implied volatility was 25%.