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Slight Drop For SO In Coming Days Before Going Up

Published April 1, 2017
9:06 PM

On March 31, 2017 The Southern Company (SO) crossed above its 150 day for the second time in 26 trading days. Historically this has occurred 222 times and the stock does not always rise. It has a median gain of 2.717 % and maximum gain of 14.698 % over the next 15 trading days.



The Southern Company Chart From TradingView.com

When we take a look at other technical indicators, the relative strength index (RSI) is at 47.3590. RSI tends to determine overbought and oversold levels. I personally use anything above 75 as overbought and anything under 25 as oversold. The current reading declares the stock is slightly heading down, but not in a strong manner.

The true strength index (TSI) is currently 10.2015. The TSI determines overbought/oversold levels and/or current trend. I solely use this as an indicator of trend as overbought and oversold levels vary. The TSI is double smoothed in its calculation and is a great indicator of upward and downward movement. The current reading declares the stock is up, however, it is begun to retreat from higher levels.

Both vortex indicators (VI) are below 1 with the positive value slightly on top of the negative. The VI determines current trend and direction. When the positive level is higher than 1 and higher than the negative indicator, the overall price action is moving upward. When the negative level is higher than 1 and higher than the positive indicator, the overall price action is moving downward. The current reading declares the stock is relatively neutral and could begin to climb within a week.

The stochastic oscillator K value is 19.2587 and D value is 27.6028. This is a cyclical oscillator that is highly accurate and can be used to identify overbought/oversold levels as well as pending reversals. I personally use anything above 80 as overbought and below 20 as oversold. When the K value is higher than the D value, the stock is trending up. When the D value is higher that the K value the stock is trending down. The current reading declares the stock is trending down with narrowing divergence between the K and D values which means the drop is almost over.

Considering the moving average crossover, RSI, TSI, VI and stochastic levels, the overall near-term stock direction appears to be downward for a few days before heading up. Based on historical movement compared to current levels and the current position, the stock could drop another 1% over the next five days and gain 2.5% from that point which is roughly 1.59% from its current level. The stock has crossed below the 150 day MA three times over the past three weeks for a drop of at least 1%. The median drop when this occurs is 1.869%. The last cross below was only two days ago and has not completed its 1% drop yet. I believe the stock will fall near the 49.30 level before moving up toward 50.57.

DISCLOSURE: I currently do not have positions in the stock mentioned above. I most likely will not enter a position within the next 72 hours. Historical movements and technical indicators should never be the sole basis for entering positions involving risk. Make sure appropriate research is conducted prior to taking any risk in a marketplace.

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