A key level of support has formed in the chart of Consolidated Edison (ED). If this level is broken, a breakdown could occur.
ED is a holding company for Consolidated Edison Company of New York, or CECONY, and Orange & Rockland, or O&R. These utilities provide steam, natural gas, and electricity to customers in southeastern New York–including New York City–and small parts of New Jersey.
The company’s regulated utilities provide it with consistent earnings. ED is also investing in renewable energy and is currently the second largest solar power producer in North America. Nevertheless, the firm is facing pricing risks due to lower market prices affecting the purchase and sale of its electricity and gas.
Its long-term debt is up from the previous quarter, and up year over year. ED has a current ratio of 0.6, which is concerning as that indicates it might not have sufficient capital to meet its short-term obligations.
While both sales and earnings growth were down slightly this year, both are expected to bounce back next year. The stock has a P/E of 17.3, indicating it is possibly undervalued at its current trading price.
The stock has shown bearish momentum over the near, mid, and long-term. This has led to a “D” Trade Grade in our POWR Ratings system, and is evident in the chart below.
Take a look at the 1-year chart of Edison ED below with added notations:
Chart of ED provided by TradingView
ED has formed a major level of support at $69 (green) over the course of past year. The stock has repeatedly rallied off the mark, and now it seems to be falling back down to the $69 level again. If the $69 support were to break, lower prices should follow for ED.
If Consolidated Edison were to break below the $69 support level, a short position could be entered, with the expectation for a breakdown.
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Christian Tharp, CMT
ED shares rose $0.24 (+0.34%) in premarket trading Friday. Year-to-date, ED has declined -2.80%, versus a 1.76% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp, CMT
Christian is an expert stock market coach at the Adam Mesh Trading Group who has mentored more than 4,000 traders and investors. He is a professional technical analyst that is a certified Chartered Market Technician (CMT), which is a designation awarded by the CMT Association. Christian is also the author of the daily online newsletter Todays Big Stock. More...
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