PEG Hits New Lows With Trend Weakening

Utilities have already struggled to sustain any leadership this year, and the backdrop has become even less forgiving as higher energy costs, persistent inflation and elevated interest rates pressure a capital-intensive group that also competes with higher Treasury yields for income-seeking capital. Against that backdrop, one name continues to show distinctly weak price action, carving out lower highs and lower lows while recently printing fresh 52-week lows. That name is Public Service Enterprise Group (PEG), and its long-term trend picture is reinforced by a PowerTrend Sell signal that has been in place since late July. The signal means PEG’s 1-month price remains below its 10-month simple moving average, confirming that the stock’s longer-term trend has shifted lower rather than simply experiencing a short-term pullback.

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For a bearish setup like this, I would rather define the risk with an option trade than take on the open-ended exposure that comes with shorting the stock outright. One approach is a slightly in-the-money put option, which requires a smaller upfront commitment while providing upside participation if PEG continues to move lower. As a hypothetical example, if PEG were to decline 10% by option expiration, the put highlighted in this setup could be on pace for approximately 114.5% profit potential, although the actual result would depend on the stock price, time remaining, volatility and other option factors.

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Wishing You the Best in Investing Success,