Will Southern Company continue to rally?
Southern Company (SO) stock took the support of ~$43.0 and rallied more than 10% in the last three weeks. Broader utilities (XLU) rose 2% during the same period. The rally happened on multiple occasions last year as well. The levels close to $42.50–$43.0 seem to be crucial support levels for Southern Company stock. The stock has shown a trend of bouncing from these levels.
Southern Company is trading at $46.9, which is almost 2% and 3% above its 50-day and 200-day moving averages, respectively. The premium to both of these levels underlines the strength in the stock. Currently, the levels close to $45.9 and $45.5 will likely act as a support for Southern Company stock in the near future.
Relative strength index
Southern Company stock is lingering close to the overbought zone with its RSI (relative strength index) at 69. RSI values above 70 suggest that the stock is overbought, while values below 30 suggest that the stock is oversold. An RSI at either extreme suggests that the stock’s direction could reverse.
The short interest in Southern Company stock rose 10% as of December 31. The total shorted shares in Southern Company were 19.2 million on December 14, while the total shorted shares increased to 20.7 million as of December 31.
An increase in the short interest could imply that more investors expect Southern Company to fall from the current price levels. The short interest is the number of shares that are sold short and not squared off. The short interest measures investors’ anxiety.