Throughout the year, SIA has consistently highlighted the Utilities sector as a leading area for investment in 2024, with numerous companies participating in this rally. Many SIA practitioners have utilized sector ETFs and mutual funds to gain exposure, while others have engaged directly with stock-specific ideas. A standout name in this space has been Constellation Energy Corp (CEG). As the largest producer of reliable, clean, carbon-free energy in the United States, Constellation is committed to driving innovation in the energy sector. In a groundbreaking partnership with Microsoft, the company aims to pioneer the historic restart of a unit at the Three Mile Island nuclear plant in Pennsylvania. This exciting news has propelled CEG stock to impressive heights, delivering a year-to-date return of 128.46%, with 35% of that gain occurring in the past month alone. This strong performance has kept CEG at the top of the SIA Relative Strength Matrix, a proprietary measurement executed daily to identify the top-performing equities within a universe of over 80,000 investments. This 6-18 month indicator allows SIA practitioners to focus on leading equities while effectively eliminating laggards. The contrast in performance is stark when comparing the top and bottom of the matrix (see table). In the accompanying table, please note the year-to-date returns in the right-hand column. Observe the significant difference in rates of return between the top and bottom performers. A key takeaway is the concept of opportunity cost: while investors in top names like Constellation Energy have enjoyed a 128% return, those in the bottom name, Global Foundries Inc., have lost 36%, resulting in an opportunity cost of 36% + 128% = 164%.
Now, let's turn our attention back to Constellation Energy shares and review the point-and-figure chart. The three highlighted circles indicate healthy consolidations, occurring after significant upward movements. The latest pullback happened during the summer months but quickly ended, leading to a continuing rally. Currently, shares are positioned in the mid-range of their support and resistance levels, with support at $241.88 (3-box) and additional support at $227.93. Resistance is established at $319.15 and $300.74 based on vertical counts, with the latter coinciding with a whole number level. With a bullish SMAX score of 10 out of 10—a near-term indicator comparing an asset against various equal-weight asset classes—CEG continues to exhibit strong short-term strength relative to other asset classes.
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