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PCG: Can utilities stand the bears?PG&E Corporatio n Short Term - We look to Buy at 12.25 (stop at 11.57) Price action has formed an expanding wedge formation. This is positive for sentiment and the uptrend has potential to return. Support is located at 12.00 and should stem dips to this area. Preferred trade is to buy on dips. Our profit targets will be 13.79 and 14.50 Resistance: 14.00 / 18.00 / 40.00 Support: 12.00 / 10.00 / 8.50 Please be advised that the information presented on TradingView is provided to Vantage (‘Vantage Global Limited’, ‘we’) by a third-party provider (‘Signal Centre’) . Please be reminded that you are solely responsible for the trading decisions on your account. There is a very high degree of risk involved in trading. Any information and/or content is intended entirely for research, educational and informational purposes only and does not constitute investment or consultation advice or investment strategy. The information is not tailored to the investment needs of any specific person and therefore does not involve a consideration of any of the investment objectives, financial situation or needs of any viewer that may receive it. Kindly also note that past performance is not a reliable indicator of future results. Actual results may differ materially from those anticipated in forward-looking or past performance statements. We assume no liability as to the accuracy or completeness of any of the information and/or content provided herein and the Company cannot be held responsible for any omission, mistake nor for any loss or damage including without limitation to any loss of profit which may arise from reliance on any information supplied by Signal Centre.
NYSE:PCGLong
by VantageMarkets
Utilities Are Sending Warning SignsThe chart above is a weekly chart of the entire price history of the PHLX Utility Sector (UTY). (The PHLX part of the name is just an historical reference to the Philadelphia Stock Exchange, which is now part of the Nasdaq.) I chose this specific ticker over other utility tickers like XLU or VPU because it provides more historical data and therefore a more powerful statistical analysis. The channel that you see is a regression channel. A regression channel shows how far above or below the mean price is currently trading. For more details about this channel, you can read the statistics note at the end of this post. Here are some warning signs that this chart is showing: 1. Utilities are outperforming the broader market. See the chart below. In the above chart, you can see that the utility sector ETF (XLU) just posted a new all-time high this past Friday. Utilities typically outperform the broader market in the late phase of the business cycle right before (and during) a recession. See below. Credit: Fidelity Investments In the main chart above (reposted below) we see that in 2022 price hit the 2nd standard deviation above the mean for the first time since 2007. Price is currently continuing to move higher and it is very possible that it can overthrow the 2nd standard deviation again. This is sending a warning sign that investors are shifting money into utilities because they believe that we are in the end stage of the economic cycle. 2. Utilities are ripping higher at the same time that tech is ripping higher. This is another warning sign. See below chart. This is somewhat of a nuanced point: Although tech and utilities are not necessarily negatively correlated and can both rise at the same time, they rarely both outperform the broader market (S&P 500) at the same time as they are doing now. To get to the bottom of what's going on, we should analyze a ratio chart between the two assets. See the chart below. This chart suggests that tech (QQQ) is rallying because it is testing resistance levels. Tech's performance relative to utilities has fallen below the monthly exponential moving averages (known as the EMA ribbon). It has likely become trapped below the EMA ribbon as it did in 2000. We can be fairly safe in making this conclusion because of the Ichimoku Cloud is forming an ominous coverage (resistance) on the weekly ratio chart similar to 2000 {for this I used the Nasdaq (IXIC) and the PHLX Utility Sector (UTY) for the comparison only because they have enough historical data to form the Ichimoku Cloud for 2000}. This is a warning sign that tech's rally is merely a bear market rally (or a rally in which resistance levels are retested but price fails to break through). 3. When I analyze utilities relative to the S&P 500 on the yearly chart two additional warning signs appear. See chart below. First, the yearly stochastic RSI shows that we approaching full oscillation down. The K line has reached oversold territory and has already begun to move up toward the D line. This could mean that utilities are gearing up to outperform the broader market for years to come. Of note, since this a relative chart, it does not necessarily mean that the price in utilities will increase over the period of outperformance, it may merely decline by less than the S&P 500 if both are falling. Second, the yearly candlesticks fully retraced to the low seen in 1999, right before the Dotcom Bubble burst. Although the SPX can squeeze out one last period of outperformance (one last bull run), the chart is sending a warning sign that this period of outperformance may be coming to an end. Further, the fact these two factors are coming together right as utility prices reach their 2nd standard deviation above the mean, in my opinion, presents a warning of what's to come for the broader market. So much confirmation is quite ominous. 4. Although, utilities are sending a signal that they may potentially outperform the broader market for years to come. When you observe the actual charts of utility components (companies that comprise the utility index), some of the charts are also extremely overbought on the highest timeframes and vulnerable to collapse, or at best stagnation. Take for example the utility company Next Era Energy (NEE), shown below. The regression channel in the chart above shows that, during the era of quantitative easing, NEE's price soared over the years to the highest levels that price can typically achieve from a probabilistic standpoint. If some utility companies are so over-extended to the upside and are vulnerable to collapse or stagnation, then even utilities may fail to serve as a safe haven if the stock market collapses. This is reflective that in the face of quantitative tightening all risk assets are vulnerable to major declines. My thoughts on how to trade this (not a recommendation): Personally, I'm ambivalent about entering a long position in utilities. Although they may outperform the broader market, since the price is already near the 2nd standard deviation above the mean, and at least some utility components are way overextended, utilities do not present an ideal risk-to-reward trade set up. Nonetheless, if I do end up taking a position in utilities, I will definitely use a trailing stop loss on my position. I see a better option in U.S. treasuries (e.g. TLT). Treasury rates typically go down, and therefore prices go up, during recessions. From a price regression perspective, treasuries are trading at historical lows, and therefore the upside potential is much better. I plan to accumulate treasuries when they reach their terminal rate again or after the weekly chart consolidates, whichever comes first. With that said, not even trading treasuries is risk-free in this unprecedented time of quantitative tightening and persistently high inflation. If inflation persists, the yields on the 10-year U.S. treasuries may need to rise dramatically higher to definitively squash it. The yearly stochastic RSI for treasuries is providing a tailwind for higher yields over the years. This in turn could bring down the price of treasuries, thereby making not even treasuries fully safe in this new supercycle characterized by persistent inflation and slowing real GDP growth (i.e. stagflation). Counterintuitively, it's a great time to be a trader as profit will likely only be made by those who constantly shift money into outperforming assets dynamically using charts and technical analysis. Statistics note: The upper and lower channel lines are 2 standard deviations above and below the mean, respectively. A total of 1,821 data points (total amount of weekly candles) formed this channel. The Pearson score is .95676. This regression line is log-based. Although the data may not be normally distributed, I have found that these regression channels are nonetheless helpful in determining what's more likely than not. The channel lines are not drawn by me, they are automatically generated by the indicator based on the data points, so there is no bias in how they are drawn. I simply apply log-linear regression to the entire price history. This channel is different than a price channel in that the lines are not exact points of resistance or support. Price can easily overthrow or underthrow the channel lines and yet the channel is still completely valid. The channel merely represents probability which helps me base my trades. The channel is not static and changes dynamically with price action, though it becomes more and more static with the introduction of more and more data, which is why I only use regression channels on assets with a lot of data points. Finally, I am not a statistician and do not intend to hold myself out as an expert on statistical analysis. Additional note: Some of my prior posts back in May and June called for bullishness in tech stocks. Those posts were for the intermediate term (months). Although I saw bullishness for tech in the intermediate term then, in the long term the picture is quite bearish.
TVC:UTY
by SpyMasterTrades
15
DUK: Nat Gas going up,so does DukeDuke Energy Short Term -We look to buy at 105.90 (stop at 102.26) Buying pressure from 97.00 resulted in prices rejecting the dip. This is positive for sentiment and the uptrend has a potential to return. Bespoke support is located at 105.50. There is scope of selling at the opening but we expect support to stem any losses. Preferred trade is to buy dips close to our bespoke support zone. Our profit target will be 113.95 and 117.00 Resistance: 114.00 / 120.00 / 124.00 Support: 105.50 / 97.00 / 86.00 Please be advised that the information presented on TradingView is provided to Vantage (‘Vantage Global Limited’, ‘we’) by a third-party provider (‘Signal Centre’) . Please be reminded that you are solely responsible for the trading decisions on your account. There is a very high degree of risk involved in trading. Any information and/or content is intended entirely for research, educational and informational purposes only and does not constitute investment or consultation advice or investment strategy. The information is not tailored to the investment needs of any specific person and therefore does not involve a consideration of any of the investment objectives, financial situation or needs of any viewer that may receive it. Kindly also note that past performance is not a reliable indicator of future results. Actual results may differ materially from those anticipated in forward-looking or past performance statements. We assume no liability as to the accuracy or completeness of any of the information and/or content provided herein and the Company cannot be held responsible for any omission, mistake nor for any loss or damage including without limitation to any loss of profit which may arise from reliance on any information supplied by Signal Centre.
NYSE:DUKLong
by VantageMarkets
Breakout From Consolidation Wedge $VICRAfter another ~ year & 1/2 consolidation period, it appears that Vicor may be ready to break from its wedge. A few hints that stood out in my eyes: -Bottoming stochastics on the weekly timeframe -Considerable jump in recent buyer volume -Clear break past the 0.786 fib level ($100.73), which has proved to be a formidable resistance in the past This chart and analysis should always be seen as just an opinion on current trends and shouldn't be taken as advice to trade any security. Do your research before placing any orders! GLTA.
NASDAQ:VICRLong
by ClargyInvesting
Power generators look poised for relief as O&G prices fallA Mean-Reversion Play Power generators like NRG and PNW have been quite beaten down lately, mostly because of surging oil and natural gas prices as we head into winter. NRG is .8 standard deviations below its mean, with 82% upside to its median price multiple of the last 3 years. PNW is currently trading about 3 standard deviations below where it usually trades in relation to its 200-day EMA, with 29% upside to its median price multiple of the last 3 years. In my opinion, NRG has more attractive fundamentals, but PNW has the more attractive chart. PNW looks particularly ripe for mean reversion here. Fundamentals NRG trades at less than 4 price to free cash flow (P/FCF), which makes it a really good value here. It has a forward P/E below 5 and a forward P/S below .4. S&P Global gives its fundamentals an average score of 87/100, and it has an average analyst rating of 8.7/10. It has 28% upside to the average analyst price target. Of the stocks I follow, NRG's price ratios are in the 92nd percentile, and its price-growth ratios are in the 62nd percentile. So it's cheap on both an absolute basis and when you factor in its rate of growth. PNW's fundamentals are less attractive. The company has been cash flow negative for a couple years. Its price-to-earnings ratio is just under 14, and its price-to-sales ratio is just under 1.9. Its dividend yield is higher, at 5.4% vs. NRG's 3.8%. But it needs to generate cash flow in order to sustain that dividend. PNW's ESG score is really high, at 2.75/3. It gets just a 35/100 fundamentals score from S&P Global and a 4.7 average analyst rating, however, and it has only 7% upside to the average analyst price target. Relative to the other stocks I follow, PNW is expensive, in the 26th percentile for price ratios and the 11th percentile for price growth ratios. So this is probably not a long-term hold for me. Open Interest a Contrarian Indicator Open interest from options traders on NRG is quite bullish, with put/call ratio at 0.6. Open interest on PNW is bearish, with a put/call ratio of 1.4. However, I've recently done some back-testing and discovered that open interest is actually a contrarian indicator in recent data. So the bearish open interest on PNW actually implies a better short-term return. The extremely negative z-score I mentioned in the first paragraph also tends to be correlated with high returns in my back-testing. So my algorithmic trading account has gone pretty heavy on PNW, whereas in my discretionary account I am overweight NRG. The Catalyst Power generators have recently gotten crushed due to rising natural gas and oil prices, not to mention uranium. Because power generators are so heavily regulated, it's really hard for them to pass rising fuel costs along to their customers. However, natural gas prices are down sharply off their highs, and oil and uranium both pulled back a bit today: If this continues, power generators may fly. NRG looks to be finding some support, and I particularly liked the price action in PNW today. Both NRG and PNW are coming off better-than-expected earnings reports, but NRG's results excluded some large costs related to winter storm Uri, and PNW reported several very unfavorable decisions from Arizona regulators. Part of the reason for NRG's outperformance is that it was well hedged against rising fuel costs. NRG announced that it will raise its dividend by 8% in the first quarter of 2022 and that it is paying down debt at a pretty impressive rate as it works toward an investment-grade credit rating. NRG paid down $255 million of senior notes through September 30, 2021 and plans to continue reducing its senior notes balance through 2023. This is just a really well-run company, IMO, which makes it a good long-term hold.
NYSE:NRGLong
by ChristopherCarrollSmith
5
TSX Utilities - Interesting junctureSecond test of the 200 dma for the utilities and what comes next ? Obvious prior tests of 200 dma have led to nice rallies will we see the same this time ? Utilities are notoriously defensive stocks held as last resort for safety and yield My thoughts are stay patient and don't be a cowboy for now lots of stocks in this sector are showing a lot of weakness don't try to buy the dip too soon most likely will get more opportunities in 2022 favorites amongst this sector are TA - FTS - SPB
TSX:TTUT
by AthenaCapital
COMPANHIA DE SANEAMENTO BASICO DO ESTADO DE SAO PAULO - SABESPCompany Description: SABESP provides public water and sewage services to residential, commercial, industrial and governmental customers in the City of Sao Paulo. Analysis: 1. Candles near strong support. 2. RSI Oversold. 3. MACD on its down side. Flashing black and may be losing its recent downtrend momentum. 4.Previous High isn't broken. However, I do see that price could be in its accumulation stage near support. 5. I see a W pattern forming. 6. Future 50/200EMA cross near future? 7. 4 Orange Solid Bricks. Momentum upside? Looking for a price target of $11! Not Financial Advice. Always Do Research Before Decision!
NYSE:SBSLong
by Redimere_91
$NRG: Rapid Growth in this Customer Focused Utility CompanyGuidance & Growth NRG is reaffirming its guidance range for 2021 with respect to Adjusted EBITDA, Adjusted Cash from Operations and Free Cash Flow before Growth Investments (FCFbG) which excludes the full year impact of Winter Storm Uri. NRG's FCFbG for the six months ended June 30, 2021 was $768 million. NRG has a very compelling value proposition, a unique consumer business that can deliver 15% to 20% annual growth in free cash flow per share over the next five years. Dividend A strong dividend growing at 7% to 9% per year. A best-in-class sustainability framework embedded in everything we do and a commitment to maintain a strong balance sheet and continue to be excellent stewards of your capital. Technicals You can see we've built up a strong long term base with a recent burst higher. High natural gas prices could be here to stay and NRG could benefit.
NYSE:NRGLong
by Fox_Technicals
Pacific Gas & Electric Price Prediction for Second Half of 2021***THIS IS NOT FINANCIAL ADVISE. DO YOU OWN RESEARCH AND FORM YOUR OWN CONCLUSIONS.*** Historical Preface: Having just come off an update on policy from a (un-surprisingly) hawkish federal reserve, it's been said that rates are unlikely to rise precipitously until 2023. The news of unlikely tapering sent many of the utilities stocks into a sharp short-term decline. I do predict these severe declines to be short term and utilities ($PCG included) will soon return to their established trends. For PG&E, the established trend is bearish. Prediction: My prediction for the remainder of the summer is the stock will likely struggle downward until it finds strong support around $9.00-$9.05 (see trended chart below). This downward pressure is a result of investors seeking ever higher returns in more speculative sectors throughout the summer. The less "sexy" sectors (Energy and Utilities) will likely languish until Fall. I also think the perception of Utilities has suffered since PG&E's and ERCOT's most recent gaffs; deserved or otherwise. ESG minded investors are avoiding these equities on a principled basis rather than financial. I anticipate this trend to eventually fade. I will continue to add to my position at the $9.25-$9.30. Once a new strong support level is found I expect a quick, multi-week bull run to $15.00 during the last part of the year. I don't foresee prices exceeding $20.00 in 2021. Pervasive Risks: The location of PG&E's service area remains its biggest and most obvious risk. Most will cite the indebtedness as PG&E's largest negative mark but I don't consider this the case since the debt structure is understood and the re-payment plan is well defined. PG&E's location in California's most arid region will dominate the future risk of investing with this company. Obviously, there's little PG&E can do to rectify the issues introduced within its service area. These same challenges would be faced by any utility who exists in this location and the service outcomes would likely be the same. But, the companies leaders are taking steps to better alleviate concerns of future wildfire liabilities. Future Confidence: I like that PG&E understands its locational challenges and is working to mitigate them. Though I work in the Electrical utility industry, I don't know how the problems posed can be easily or cheaply addressed beyond better maintenance programs. PG&E seems to understand their position on that front is fragile and they need help finding other ways to meet their challenges; even if they don't understand what those challenges precisely are or how to mitigate them. This makes the close work they're doing with Palantir a very bullish indicator of PG&E's future success. Final Remarks: I remain very bullish in the long term.
NYSE:PCGLong
by forever_green
Southern Company Stock Analysis (SO)Basic Facts: Southern Company is itself a holding organization who owns all of the Common Stock for Alabama Power, Georgia Power, Mississippi Power, and Southern Gas; all of which are publically operating utilities. Southern’s other holdings include Natural Gas Distribution, Marketing, Wholesale services, and pipeline investments. Growth Factors: The total customers served under Southern’s (SO) area are about 4.5 million. This looks to be one of the largest areas of growth for the next decade. The recent pandemic has forced many people to re-evaluate what they want out of life. Contemplation has resulted in a mass exodus from northern states to southern states (see census data) as many freedom sensitive and financially cognizant individuals seek more accommodative socio-economic environments. I see this trend to continue as COVID transforms from a persistent threat to a source of past-trauma and driver of personal reflection. The trend of “realization” will, in all likelihood, continue and grow to a nexus in the next couple years. This may well increase Southern’s customer base by an order of magnitude over the next decade. The number of customers will grow until economic pressures force northern and liberal states to seek conformity with their more free counterparts. I think these pressures will need to persist for ten years before changes in these sates become apparent enough to soften demand for family and individual relocation. Demand for Green Energy isn’t subsiding. Common notions of “green” energy typically involve: Solar, wind, and natural gas. Southern has a large presence in the Natural Gas industry along with very accommodative infrastructure and buy-back policies for solar generation. Political environment and other entities with SO’s area (Transmission entities, EMC’s, and Power Co-ops) are also accommodative to Solar Generation through buy-backs and Green Energy purchasing programs. These will bode well against the persistent narrative in favor of green energy. SO’s interest in the Vogtle Units 3 and 4 also paints a very good picture for the future of net-zero carbon emitting generation. Commonly repeated negativity surrounding the numerous cost over-runs and delays surrounding construction of the Units are, in my opinion, vastly over-stated. The new Vogtle Units are state-of-the-art (new cooling technology and new style Westinghouse alternator). Most of what’s being done at Vogtle has never been done before in scope, scale, or timeline. The bankruptcy of Westinghouse (the manufacturer of the alternator used for Units 3 & 4) also stretched expected completion date. Considering these pressures, miscalculations in costs and timelines are to be expected. However, I believe most investors have priced in delays within the present stock’s price (~$61.00 per share). I treat the inclusion of expanding Nuclear generation in my bullish assessment of Southern’s stock because, as the amount of traditional green energy (Solar and Wind) increases as a percentage of effective generation, it will become painfully clear the system becomes more fragile in exponential proportion to the amount of “green” generation expressed. Protecting the system against itself when this proportion of expressed green generation is large remains an evolving science. Many substations are adding high-voltage reactors to provide inertial frames for fault detecting relays but this will likely not be enough to appropriately protect the electric system. This will make classic rotating machines (steam turbines) necessary to provide base-generation and system stability (this is not opinion, but fact). Nuclear power is also cheaper to generate though maintenance costs can be substantive (there are few things more complex than steam turbines). This will create an economic pressure for Southern to generate more power through their nuclear units as other utilities looking to buy power off the wholesale markets demand the cheaper energy (this is my opinion). Monetary Environment: In the age of Central Bank debt jubilation it’s always appropriate to consider the actions of the Federal Reserve into one’s evaluation of American equities. This is no different for my evaluation of Southern Company. The Fed has provided markets with liquidity ad nauseam. This was true even before the repo crisis of summer 2019 and the liquidity crisis of March 2020. Looking at the chart, one can see the precipitous rise of SO’s stock price throughout 2019 as the Effective Federal Funds Rate (in purple) decreased rapidly in the aftermath of the “taper tantrum” in 2018. As the Fed has driven down the effective interest rate and costs of capital, investors can expect more capital appreciation for each dollar invested into financial markets. This has resulted in speculative waves in tech and other growth sectors which themselves have bred things like “meme stocks” and ESG investors. Narrative and “hopium” have become more significant than cash flow and asset valuations. This fact makes my present valuation of most equities included within the S&P remarkably over-bought and “bubbly” (death-gaze on TSLA). Over time, debt can never remain solvent at the present levels. The Fed will have to taper eventually and, once it does, capital will fly at super-sonic speeds away from growth investments (Amazon, Apple, Tesla, NVidia, and the tech industry as a whole) to value investments, like SO. This will not necessarily result in a rise in the stock’s price but those who are already positioned in value stocks once the Fed tapers will sleep easily. Stock Price: I expect the utility sector to languish through the summer as monetary conditions will remain accommodating throughout the rest of 2021. I don’t expect a rise of the stock price above $67.00 throughout the summer with no breakout above $70.00 for 2021. The short-term trend of SO is bearish with the equity in a noticeable downtrend. However, SO is approaching the lower bound of a regression trend with a buy price of $60.50. A longer-term regression trend shows a bullish trend with the present price approaching the lower bound of that trend as well. SO will need to hold $60.00 as a resistance. If this resistance fails the next price target would be $57.35. My longerm (3-10 years) valuations is: BULLISH
Editors' picks
NYSE:SOLong
by forever_green
5
Sector early indicator? Not usually: Health, Utilities & TransptThe Healthcare sector, Utilities sector, and Transportation sector - here represented by the S&P Health Care Index (S5HLTH, in blue), Dow Jones Utility Average ( DJU, in purple), and the Dow Jones Transportation Average (DTX, in orange) - do not usually act as early indicators against the broader market (here represented by the DJIA in gray, and the NASDAQ in black)... except perhaps for DJU falling from a peak in Jan 2015 (DTX a little earlier in Dec 2014), and DJU again in Dec 2017. (Around the turn of the century, DTX also peaked fairly early - in 1998.)
DJ:DJI
by dartde