Edison International (EIX) is another power utility that's looking toppy right now. Despite what looks like a strong chart, Edison is only up around 5.3% since the first trading day of January, underperformance that's likely to be at the top of shareholders' minds as this stock turns over.
Edison's chart pattern is pretty straightforward: It's a rounding top. The rounding top is just what it sounds like, a gradual rollover in shares from an uptrend to a downtrend. The pattern indicates a slow shift in control from buyers to sellers. The fact that EIX's dashed uptrend line got broken this month adds some extra evidence to the downside potential of this setup.
The fact that a support level in RSI (at the top of the chart) got broken is negative for shareholders as well. Remember, momentum is a leading indicator of price, so a break in support for RSI means that EIX is dropping at a faster rate than before. I'd be a seller here.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV