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What Recent Changes in Southern Company’s Indicators Could Mean

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What Recent Changes in Southern Company’s Indicators Could Mean PART 1 OF 4

Southern Company Fell to 2-Year Low on Goldman Sachs Downgrade

SO in deep oversold zone

It seems to be a rough new year for Southern Company (SO) investors. Georgia-based Southern Company stock fell to a two-year low after Goldman Sachs downgraded the stock on January 11, 2018. Goldman Sachs cut Southern Company’s outlook from “neutral” to “sell” due to the risks associated with the completion of its Vogtle Plant.

Southern Company stock closed at $45.3, 1.5% lower on January 12, 2018. It is currently trading in the oversold zone with its RSI (relative strength index) at 15, indicating an imminent reversal in the stock’s direction.

Southern Company Fell to 2-Year Low on Goldman Sachs Downgrade

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When a stock’s RSI falls below 30, it’s said to be trading in the oversold zone, and when its RSI goes above 70, the stock is said to be trading in the overbought zone. Extreme RSI values might hint at a pending reversal in the stock’s direction.

Moving averages

Southern Company stock is presently trading 10% below its 50-day moving average and 9% below its 200-day moving average. The huge discount to both the key moving averages highlights weakness in the stock. Its 200-day moving average near $49.7 is likely to act as a resistance for SO stock in the short term.

Short interest

According to a recent report, short interest in Southern Company stock increased by a massive 25% on December 29, 2017. Total shorted shares in SO on December 15 were 22.5 million, while the number increased to 28.1 million on December 29, 2018.

The increase in short interest might suggest that more investors are anticipating the stock to fall from its current levels. Short interest tracks investor anxiety.

Southern Company stock has shown tremendous weakness recently with a fall of over 12% in the last one month. Broader utilities (XLU) (IDU) fell 10% in the same period.

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