Electricity & Oil Stock to Watch Next Week

Options are looking extremely affordable on XEL

Managing Editor
Feb 24, 2023 at 12:48 PM
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Subscribers to Chart of the Week received this commentary on Sunday, February 19.

Historically, President’s Day week garners a poor performance out of the S&P 500 Index (SPX), per data from Schaeffer’s Senior Quantitative Analyst Rocky White. In fact, short trading weeks in general (when one or more Federal holiday closes the market) for weeks in which Monday is the day off, like next week, the index does not outperform five-day weeks. On the flip side, when Friday is the holiday, the SPX pulls a weekly gain that is six times the average of a week with Monday off. 


White also gathered a list of the top 20 outperformers during President’s Day week over the past 10 years. Electricity stocks make up five of the 20 names, including the top three positions. Several other sectors showing up repeatedly include software and electronic equipment. Earlier in the week Schaeffer’s Digital Media Content Manager Laura McCandless covered Pinnacle West Capital (PNW), which holds the top position.

Today I’d like to dig into #2 on the list, Xcel Energy Inc (NASDAQ:XEL), an electric and natural gas delivery giant. Per White, XEL averaged a return of 1.6% President’s Day week over the last 10 years, finishing positive 100% of the time. From the stock’s Thursday close of $67.26, the shares could be looking at a settlement just shy of $69 this time next week.


Xcel Energy stock has seen a volatile six months on the charts, including both a golden cross and a death cross (circled below in red). The bull run following the stock’s golden crossover of the 20-day and 50-day moving averages in mid-November was relatively short-lived, but led the shares just shy of a four-month peak. Subsequently, late last month, the equity saw a death cross of the same two moving averages, which could indicate that next week’s historically bullish outperformance may also be short-lived (if it happens at all).


XEL options traders have been call-heavy in both the long and short term. Albeit amid light absolute volume, Xcel Energy stock sports an Schaeffer's put/call open interest ratio (SOIR) reading of 0.56, which sits in the low 18th annual percentile. Echoing this, at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 5.20 sits higher than 85% of annual readings, indicating calls have been more popular than usual.

Regardless of the risk you’d be willing to take during the upcoming holiday-shortened week, options are looking extremely affordable. Specifically, XEL’s Schaeffer's Volatility Index (SVI) of 21% ranks in the 18th percentile of the last 12 months.

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