Green energy & ESG projects are still top of mind for many investors
We still remain above the 100 week moving average and in the green channel
“Only” trading 26x above earnings
Growing earnings at 8% a year
Paying a modest dividend of ~2%
Not much else I’m afraid…
WHY I’M BEARISH
The weekly RSI has just entered the bull zone
We’re perilously close to crossing below the 100 week moving average and on a declining trajectory
Very much overdue a correction
A normal P/E ratio would be in 15-18 ratio. This would price it back in the 30s.
Much better value stocks in the energy sector, paying much higher dividends.
NEE have traditionally paid as high as 4% yield going back to the early 2000’s, the decline to 1.6% in December 2021 may yet be “beaten” with an even lower yield this time out. This will likely turn away many savvy investors looking for underpriced value.
WHAT I’M DOING
Definitely NOT buying this stock, not even 30% off all-time highs
Will be wanting for the trigger to confirm in order to enter short in the coming days
First target would be $35, with a terminal target of $18 to come back and retest an important level. This would also coincide with the 0.618 fib off the entire 40 year move.
Great analysis! It's so helpful to read this analysis because I was trying to figure out whether to cut my long position which has been flat lately. One technical indicator that validates your long-term short thesis is the yearly RSI at the close of 2021. On the adjusted yearly chart, the RSI for NEE was over 98 for 2021. This is obviously unsustainable. For now, I remain long until my ATR-based trailing stop loss is triggered. It's premature to short at this point because the price found significant support at the 5-year moving average. If my stop-loss is triggered, I have an alert to re-enter my long position around the 10-year moving average. Just my thoughts! Thanks for the post.
DigiDavid
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@spy_master, Thanks for the kind words. Good shout on raising your stop loss as it climbs. You seem to be well positioned, how you're trading it. What was your entry? Currently retesting the underside of the 50 week MA, after bouncing off the 200. Will be watching if that fails. Currently creating a flag pattern though, which could still lend itself to another leg upstairs.
SpyMasterTrades
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@DigiDavid, Hi! My entry was ~$75 and my ATR-based trailing stop will trigger at ~$74, so at this point my maximum loss potential is less than 2% (if slippage does not occur). I have a very accurate bottom indicator that suggests that NEE reached a significant bottom on May 12th and will not break that low for at least the next several months. However, I agree that on the longer-term timeframe (yearly), NEE needs a major correction down but that's unlikely to happen in the next couple of months. Check out the monthly displaced EMA indicator. Up trend continues for now! I'll be playing this one cautiously though.