American Electric Power (AEP) Showing Signs Of Being A Roof Leaker

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified American Electric Power ( AEP) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified American Electric Power as such a stock due to the following factors:

  • AEP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $170.1 million.
  • AEP has traded 346,553 shares today.
  • AEP is trading at 1.74 times the normal volume for the stock at this time of day.
  • AEP crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on AEP:

American Electric Power Company, Inc., a public utility holding company, engages in the generation, transmission, and distribution of electricity for sale to retail and wholesale customers. The stock currently has a dividend yield of 3.7%. AEP has a PE ratio of 16.4. Currently there are 8 analysts that rate American Electric Power a buy, no analysts rate it a sell, and 8 rate it a hold.

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