Technical Analysis: Overbought Signals in Utilities Sector AEP and NGG

This analysis is based on the Benzinga report [1] published on November 10, 2025, which identified two utilities stocks potentially flashing warning signs for momentum-focused investors.

The article highlights

and as exhibiting overbought technical conditions with RSI values of 72.4 and 70.9 respectively, both exceeding the traditional 70 threshold that typically signals overbought conditions [1]. Both stocks are trading near their 52-week highs after experiencing significant momentum over the past 30 days.

• AEP
  : Trading at $122.27 (-0.37% daily), near 52-week high of $123.31, with +9.16% gain over past 30 days [0]
• NGG
  : Trading at $77.71 (+0.52% daily), near 52-week high of $77.94, with +7.76% gain over past 30 days [0]

The technical warning comes despite both companies demonstrating strong fundamentals, including BUY consensus ratings from analysts and positive recent earnings performance [0]. AEP maintains a reasonable P/E ratio of 17.87x with 17.08% net profit margin, while NGG recently beat earnings expectations with EPS of $0.84 versus estimates [0].

: The most significant insight is the disconnect between technical indicators and fundamental strength. Both stocks show overbought technical conditions [1] while maintaining solid fundamentals and positive catalysts including data center demand growth and strategic partnerships [0][2].

: The utilities sector is currently underperforming with a -0.20% decline [0], suggesting potential sector rotation or profit-taking after recent gains. This broader sector weakness could amplify individual stock corrections.

: Both stocks have experienced strong upward momentum (AEP +9.16%, NGG +7.76% over 30 days) [0], which may be unsustainable in the short term. The RSI levels above 70 suggest that buying pressure may be exhausted temporarily.

: AEP’s partnership with Quanta Services for transmission infrastructure and NGG’s benefit from UK data center demand surge [2] provide fundamental support that could mitigate technical correction risks.

. Historical patterns suggest that when RSI exceeds 70, particularly after strong upward moves, stocks often experience pullbacks of 3-8% [1]. Key monitoring factors include:

1. RSI Divergence
   : Watch for RSI making lower highs while price makes higher highs (bearish divergence)
2. Volume Patterns
   : Declining volume on up days combined with increasing volume on down days
3. Support Levels
   : AEP key support around $119-120, NGG support around $76-77 [0]

Despite technical warning signs, several factors support longer-term positioning:

1. Strong Fundamentals
   : Both companies maintain BUY consensus ratings with solid profitability metrics [0]
2. Growth Catalysts
   : Data center demand surge and infrastructure investments provide growth tailwinds [2]
3. Defensive Characteristics
   : Utilities typically experience more gradual corrections rather than crashes due to dividend support
4. Valuation Reasonableness
   : AEP’s P/E of 17.87x suggests reasonable valuation despite recent gains [0]

1. Interest Rate Developments
   : Utilities are highly sensitive to interest rate changes
2. Sector Rotation
   : Monitor institutional flows between sectors
3. Earnings Catalysts
   : Recent positive earnings news could sustain momentum despite technical overbought conditions [0][2]
4. Regulatory Environment
   : Potential regulatory changes affecting utility valuations

• Technical Status
  : Both AEP and NGG show overbought conditions with RSI above 70 [1]
• Price Levels
  : Trading near 52-week highs after strong 30-day gains [0]
• Fundamental Strength
  : BUY consensus ratings with solid profitability and recent earnings beats [0]
• Growth Catalysts
  : Benefiting from data center demand and infrastructure investments [2]
• Risk Level
  : Short-term correction risk of 3-8% based on historical RSI patterns [1]
• Support Levels
  : AEP $119-120, NGG $76-77 [0]

The analysis reveals a complex situation where technical warning signs conflict with fundamental strength, suggesting that while short-term corrections are possible, the “crash” scenario may be overstated given the defensive nature of utilities and positive business fundamentals.