Run for security reasons. That was the mood on Wall Street Tuesday after President Donald Trump halted negotiations for a second Stimulus package until after the elections in November.
The decision came as a shock to financial markets as the president tweeted a few days earlier that the country must work together to seek further economic relief. Although Republicans and Democrats continue to argue over the size and details of additional stimulus measures, Treasury Secretary Steven Mnuchin and House Spokeswoman Nancy Pelosi reportedly made progress in the discussions and should continue talks on Tuesday.
The central theses
- President Donald Trump halted negotiations on a second stimulus package until after the November elections.
- Edison International (EIX) Stocks pushed above the top trend line of a decline wedge Sample and 50 days simple moving average (SMA).
- CMS Energy Corporation (CMS) broke out over you ascending triangle and the closely coordinated 50- and 200-day SMAs.
While stocks reversed to close lower after the announcement, utility names bucked the trend to close higher. Investors view the sector as Safe haven in times of uncertainty due to the Group’s predictable revenue streams and high paying dividend yields. Below, we take a closer look at two leading utility stocks and analyze their charts to identify potential issues trade Opportunities.
Edison International (EIX)
Californian utility giant Edison International supplies electricity to around 5 million customers in an area of 50,000 square miles in southern California, with the exception of Los Angeles. Investors will be looking for the utility to improve its earnings in the second quarter, where it posted earnings of $ 1 per share – which a Bottom line Decrease of 36.7% compared to the previous year. Analysts expect the company to announce the third quarter adjusted result from $ 1.43 per share when financial results are released later this month. As of October 7, 2020, Edison International’s stock will have a Market capitalization of $ 20.37 billion, a return of 4.85%, and 26% lower year-to-date.
Buyers have pushed the stock price above the top trendline of a falling wedge pattern and 50-day SMA Tuesday, which could add further momentum in subsequent trading sessions. Those who step in here should expect a spike to the $ 62 level where price can slide into the overhead resistance from a perennial horizontal line. Protect the capital with a Stop loss order placed somewhere below yesterday’s breakout point at $ 52.
resistanceor a resistance level is the point where the price of an asset encounters pressure on its way up as more sellers want to sell at that price.
CMS Energy Corporation (CMS)
CMS Energy operates four times as an energy company Segments: Electricity supplier, gas supplier, company and Enerbank. The $ 18 billion utility posted adjusted earnings of 49 cents per share for the second quarter. The number exceeded analysts’ expectations by 3 cents per share and improved by 48.5% over the prior-year quarter. CMS also confirmed its full year 2020 Earnings per share (EPS) forecast range from $ 2.64 to $ 2.68. The stock traded at $ 62.89 and offered a dividend yield of 2.59%. It increased by 2% compared to the previous year and exceeded the industry average in the same period by around 3% as of October 7, 2020.
CMS stocks broke out above an ascending triangle and the closely matched 50- and 200-day SMAs on Tuesday. In addition, the price has sufficient headroom to rise prior to consolidation as the Relative Strength Index (RSI) is under overbought conditions. Traders buying the outbreak should look to retest the All time high at $ 69.12 but exit if the stock doesn’t hold above the 200-day SMA around $ 61.
Disclosure: The author held no positions in any of the above securities at the time of publication.