2 Reasons to Dump This Energy Stock

D stock has been the worst to own Thanksgiving week, and is staring at familiar resistance

Nov 19, 2018 at 1:50 PM
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While battered PG&E (PCG) has been dominating headlines recently due to its role in the California wildfires, one other utility stock made a blip on our radar: Dominion Energy Inc (NYSE:D). While most other stocks have swooned since October, shares of the electric and natural gas supplier have muscled higher. However, that could change soon, if recent history is any indicator.

Specifically, D stock tops our list of worst stocks to own during Thanksgiving week. Over the past 10 years, the equity has been higher this week just 20% of the time -- the only S&P 500 stock with that low of a win rate. Further, the shares have dropped an average of 0.7% during the short holiday week, per data from Schaeffer's Senior Quantitative Analyst Rocky White.

As alluded to earlier, though, while the broader stock market took a turn for the worse in October, Dominion Energy stock added 1.6%. The security is already nearly 3.8% higher in November, too. Still, D shares are now facing a former hurdle in the form of their 80-week moving average.

The stock is back within one standard deviation of this trendline after a lengthy stretch below it. Looking back 15 years, similar run-ups to the 80-week have had bearish implications for D. After the past 11 signals, the shares have averaged a one-month loss of 4.75%, and a three-month loss of 6.54%. Further, D has been higher three months later just 50% of the time, per White. From the equity's current perch at $74.09, a similar three-month loss would put Dominion around $69.24 in the first quarter.

D stock chart nov 19

Meanwhile, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.25 indicates that put open interest quadruples call open interest among options expiring within three months. This ratio sits in the 28th percentile of its annual range, suggesting short-term options traders are more call-heavy than usual right now.

Peak open interest sits at the December and January 2019 75-strike calls, with roughly 5,500 and 6,100 contracts outstanding, respectively. This abundance of bullish bets overhead could translate into an added layer of short-term resistance for Dominion stock in the near term.

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