The Relative Strength Index (RSI) is a crucial momentum indicator that helps traders gauge a stock’s strength during periods of both price increases and decreases. An RSI reading above 70 generally indicates an asset is overbought, suggesting a potential downturn in the near future. As of August 30, 2024, three utility stocks are displaying RSI values above this threshold, potentially signaling a warning to momentum traders seeking quick profits.
Eco Wave Power Global AB (WAVE)
Eco Wave Power, a company focused on renewable energy solutions, received approval on August 8th to repurchase 10% of its American Depositary Shares. This news, coupled with strong performance over the past month, has propelled WAVE’s stock up by approximately 40%. The stock has reached a 52-week high of $4.94, and its current RSI value sits at 70.67. On Thursday, WAVE closed at $4.16, gaining 1.5% for the day.
WEC Energy Group Inc (WEC)
WEC Energy, a prominent utility company, announced better-than-expected quarterly earnings on July 31st. Scott Lauber, president and CEO, emphasized the company’s solid performance, attributing it to strong operational efficiency and a commitment to customer satisfaction. This news has contributed to WEC’s stock gaining around 8% over the past month, hitting a 52-week high of $93.78. WEC currently boasts an RSI value of 75.32. Despite its strong performance, WEC shares dipped slightly on Thursday, closing at $92.77, a 0.02% decline.
PG&E Corp (PCG)
PG&E, another major utility company, also reported better-than-expected quarterly earnings on July 25th. CEO Patti Poppe highlighted the company’s focus on safe operations, wildfire risk reduction, and financial stability. She also emphasized a vision for the future that includes reducing household energy costs and carbon emissions. These positive developments have boosted PG&E’s stock by roughly 7% over the past month, reaching a 52-week high of $19.84. The stock currently has an RSI value of 75.64. On Thursday, PG&E experienced a significant upward surge, closing at $19.60, a gain of 3.7% for the day.
While these companies have recently shown positive performance, their overbought RSI values may suggest a potential short-term correction is on the horizon. Investors relying on momentum strategies might want to proceed with caution or consider re-evaluating their positions within these utility stocks.
