Edison International (NYSE:EIX) is a leading public utility with a major presence in Southern California. The stock has been declining sharply since the wild fires began in the Los Angeles area last week. On December 1, EIX was trading as high as $81.96 a share. Traders should note that the stock is now trading around $68, below its important 50- and 200-day moving averages. This chart pattern indicates weakness in the equity and potentially further downside.
Watch This Support
The next major support area for EIX is around $62, which is where the stock should be defended by the institutional money. In February 2016, EIX broke out from this area. When falling stocks retest prior break-out levels they often find support and defense. This is a trade area where I will look to get involved on the long side. I'll trade the stock by buying the equity or call options.
