While many utility stocks are trading close to their peaks, NRG Energy (NRG) stock has fallen more than 20% from its 52-week high since its first-quarter earnings early last month. The stock might witness more weakness in the short term based on its simple moving average levels. NRG Energy stock is trading at $34.4, which is almost 9% and 11% below its 50-day and 200-day moving average levels, respectively.
The large discount to both of these levels suggests weakness in the stock. NRG Energy’s 50-day level crossing below its 200-day level could be a sign of more weakness. Technical analysts call the pattern a “death cross.” The pattern indicates a bearish signal. In the short term, NRG Energy’s 50-day level around $37.7 could act as a resistance for the stock.
Relative strength index
NRG Energy’s RSI (relative strength index) was 41 as of June 17. The RSI level indicates that the stock isn’t in the overbought or the oversold zone. An RSI level above 70 indicates that the stock is overbought, while an RSI level below 30 indicates that a stock is oversold. RSI levels at extremes suggest an imminent reversal in the stock.
The short interest in NRG Energy increased 26% on May 31. The total shorted shares increased to 11.5 million on May 31 compared to 9.2 million on May 15. An increase in the short interest indicates that more investors expect NRG Energy to fall from its current levels. The short interest represents investors’ anxiety.
Weaker-than-expected first-quarter earnings could be one of the important drivers of NRG Energy’s fall. So far this year, NRG Energy has fallen more than 13%, while the Utilities Select Sector SPDR ETF (XLU) has risen more than 15%. AES (AES) stock has risen 16% in 2019.