Duke Energy (DUK) has been correcting to the downside since early July. Have prices come down enough to make DUK attractive to buyers driven by price and value? Are we getting technical clues that buyers are probing the long side again? Let's examine our charts and indicators.
In this twelve-month daily chart of DUK, below, we can see a five-month correction to the downside. Our favorite moving averages give us a number of sell signals along the way down. In August, DUK closes below the 50-day average line, and by the end of the month the slope of the 50-day turns down. In late September, the 200-day average line is broken, followed by a death cross of the 50-day and 200-day averages in late October. In October and November, we can see two rally failures to the underside of the cresting, 200-day line.
The On-Balance-Volume (OBV) line makes a slight peak at the end of September and has inched a little lower over the past two months. This slight decline in the OBV line, as prices have corrected about $13 or so, suggests that longs have largely held their positions. In the lower panel of this chart is the 12-day momentum study. As prices made lower lows in October and November, we can see that momentum readings made higher lows. This is a bullish divergence and tells us that the pace of the decline slowed into the November low. Buyers of DUK are the reason the decline slowed.
In this weekly chart of DUK, below, we can see that prices are below the flat, 40-week moving average line. The weekly OBV line only shows a slight decline over the past four to five months. The Moving Average Convergence Divergence (MACD) oscillator is below the zero line for a sell signal, but the next signal is likely to be a cover-shorts buy signal.
Bottom line: Yes, DUK is still in a downtrend from its July zenith, but a picture of slowing momentum makes me look long. Aggressive traders can probe the long side of DUK around $74 and add on a close above $77. A close below $71 would tell us that we have jumped the gun.