The Utilities have been a strong sector this year, and Exelon (EXC) has been a strong stock in a strong sector. Longer term, Exelon has been in a sideways trading range the past five years. Can it finally break out to the upside?
In this daily chart of EXC, above, we can see that prices are above the rising 50-day moving average line and the rising 200-day line. The daily On-Balance-Volume (OBV) line has been in a strong rise since December and made new highs the past month, along with the price action. A rising OBV line tells us that buyers are being more aggressive, with more volume of shares traded when EXC has closed higher.
Buying a stock in a rising market tells you that someone really wants it. In the lower panel is our 12-day momentum study, which has weakened the past month when prices were moving higher. This slowing momentum vs. higher prices is called a bearish divergence and can at times foreshadow a correction.
In this five-year weekly chart of EXC, above, we can see how prices have topped out in the $38-$40 area while the $26 zone has been bought. Prices are above the rising 40-week moving average line. The weekly OBV line has been positive this year, and the Moving Average Convergence Divergence (MACD) oscillator is positive, with its current position over the zero line.
A weekly close above $38 could be just the spark to push EXC into another leg higher. The mid $40s area is our price target should the breakout occur. A close back below $34 will do serious damage to the bull case.