Overbought Energy Stocks: Centrus Energy and Kinder Morgan Raise Concerns

## Overbought Energy Stocks: Are Centrus Energy and Kinder Morgan Poised for a Correction?

The Relative Strength Index (RSI) is a valuable tool for investors, offering insights into the momentum of a stock’s price action. When the RSI surpasses 70, it generally signals that a stock is overbought, suggesting a potential short-term correction.

As of October 23, 2024, two energy sector stocks,

Centrus Energy Corp (LEU)

and

Kinder Morgan Inc (KMI)

, have crossed the 70 threshold on the RSI, raising eyebrows among momentum investors.

Centrus Energy Corp (LEU)

has been on a roll in recent weeks, fueled by a contract awarded to its subsidiary, American Centrifuge Operating, by the U.S. Department of Energy to expand domestic production of High-Assay, Low-Enriched Uranium. The company’s stock has surged approximately 86% over the past month, reaching a 52-week high of $104.50. However, with an RSI currently at 76.32, the stock may be due for a pullback. On Tuesday, shares of Centrus Energy closed at $93.36, down 1.2%.

Kinder Morgan Inc (KMI)

, a major energy infrastructure company, reported third-quarter revenue of $3.699 billion, missing the consensus estimate of $3.975 billion. While the company reported a solid quarter with increased contributions from its Natural Gas Pipelines and Terminals business segments, the earnings per share fell short of analyst expectations. Despite this, the company’s stock has seen a 12% rise over the past month, reaching a 52-week high of $25.43. However, with an RSI of 75.33, KMI also enters the overbought territory, potentially indicating a short-term correction may be in the cards. On Tuesday, shares of Kinder Morgan closed at $24.81, up 0.3%.

While these stocks have experienced recent momentum, the overbought signals should serve as a reminder for investors to proceed with caution, particularly those who prioritize momentum strategies.

It’s important to remember that technical indicators like the RSI are not foolproof and should be considered alongside other fundamental and market factors before making any investment decisions.