Hurricane Harvey moved its way to land on the weekend, but the storm is not finished yet. As of this morning, the resulting tropical storm is sitting over southern Texas, dumping rain showers on the region that are providing the brunt of the damage for which the storm will likely be remembered.
From an investing perspective, as the fourth largest city in the country, Houston represents the 15th largest economy in the world. Put bluntly, the economic costs of the storm’s affect on Houston will be widespread.
Today’s three big stock charts look at the current technicals for CenterPoint Energy, Inc. (NYSE:CNP), Marathon Oil Corporation (NYSE:MRO) and Kinder Morgan Inc (NYSE:KMI). These are three of the largest companies in the area, meaning that their stock prices are likely to be affected over the short-term. Let’s see how their charts will help or hurt:
CenterPoint Energy, Inc. (CNP)
CenterPoint Energy is headquartered and serves the Houston area in addition to a large swath of the southeast. CNP shares have been surging lately as part of the rally that we have seen in the utility sector. CenterPoint shares broke through chart support that should act as support if we see a pullback in the wake of Harvey, maintaining a positive outlook.
- CNP stock has been trading in a technical bull market since early 2016 and the stock hasn’t slowed a bit despite the threat of higher interest rates. Shares did see some volatility in the first quarter of 2017 as the FOMC did move to raise rates, affecting dividend yielding stocks like CenterPoint, but the strong technical trend continues for this stock.
- Shares of CNP recently broke through technical chart resistance at $28.75. This level had reversed the stock on two previous attempts, but the post-earnings strength of the rally in August allowed the stock to shoot through this resistance level.
- Now, with the recent strength, CenterPoint Energy shares have been lingering in overbought territory for the last week. We always remember that “overbought can become more overbought”, but in this case we expect the news surrounding Hurricane Hugo to trigger some profit-taking. Look for support at $29 to signal the stock as a buy for most traders.
Marathon Oil Corporation (MRO)
Marathon Oil has been in a decided downtrend from a long- and short-term perspective as the oil exploration and production firm has found it hard to adjust to the volatility in both crude oil prices as well as changing demand for its products.
MRO has been on our target short list for some time due to this, let’s take a look at what the chart is telling us now.
- Marathon Oil shares moved into a technical bear market in March and haven’t looked back. The stock is also mired in an intermediate-term bearish trend that should have traders and investors selling into any strength.
- The 50-day moving average for MRO is in a decided downtrend. This indicates that there is more than a 2:1 chance the stock will continue seeing lower daily closing prices.
- Shares of Marathon Oil have hit an oversold reading from their RSI indicator more than a week ago, helping to stop the massive slide lower that was underway. Despite this short-term dead cat bounce, the target price for MRO remains lower as we expect to see traders sell into the ebbing short-term strength.
Kinder Morgan Inc (KMI)
Infrastructure will be a large focus of the damage from Hurricane Harvey. Kinder Morgan operates and maintains the infrastructure system for energy in the Houston region and well beyond, including pipelines for oil and natural gas.
KMI shares have rallied lately, ahead of the storm, but appear to still be in a position where the storm aftermath won’t harm or help prices as the charts are clearly in charge of Kinder Morgan’s stock daily movement.
- KMI shares saw a huge spike after their latest earnings report in July, shooting shares from $19.50 to $21 in a few days. From there, the technical took over as the stock was unable to maintain levels above its 200-day trendline, which had been in a decline.
- Since then, Kinder Morgan shares sold-off to $18.50, which is the site of consistent chart support for the stock. The monthly chart below displays the importance of this price for support and resistance going back as far as early 2016. Traders should consider this a “buy zone” price for KMI shares.
- We expect to see a little weakness on Kinder Morgan stock from the storm, but in general not enough to take away from the momentum that has been building. The charts suggest that Kinder Morgan will continue its rally as it moves above $19.35 with a target for the next level of resistance being $20.50.
- Longer-term perspective traders should take note of the fact that KMI stock is trading in bear market territory. This will add selling pressure to Kinder Morgan stock as it approaches $19.60, the site of the stock’s 20-month moving average.
As of this writing, Johnson Research group did not hold a position in any of the aforementioned securities.