UK utility stocks (mostly) rally after election result, but where next?

For almost all the major utilities on the FTSE, the election result has seen rallies to new records. There is one exception, Centrica, whose downtrend goes on.

UK utility companies faced the threat of nationalisation if Jeremy Corbyn attained power. With the Conservative win, that prospect is banished for at least five years. As a result, shares in these firms have rallied sharply, with the strong dividends an added attraction. The exception is Centrica, which remains close to multi-year lows.

National Grid

The shares for National Grid have hit a record high over the past two weeks, rallying through 2017’s peak. This is the latest high in a trend that has been rising since early 2018. Higher lows have been seen at the £7 level of September 2018 and January 2019, while a sell-off into May 2019 and then early September also saw buyers enter. Since then the trend has taken off, confirming the bullish view.

SSE

Here too the shares have rocketed, hitting a record high this week for SSE. But this comes off the back of a remarkable surge from £9.50 in late 2018 and May 2019, which has seen the shares gain over 50%. The price also smashed through trendline resistance from the 2015 high, and shows little sign of stopping yet.

United Utilities

After 2017 saw the great post-2009 uptrend in United Utilities come to a rude halt, the shares have finally managed to hit new highs. Years of recovery have been 2018 and 2019, and higher lows and higher highs over this period have confirmed the steady recovery. A push through the £9.33 high from 2016 and 2017 suggests that the buyers are back in charge.

Severn Trent

It is a similar story here. The price of Severn Trent has been in rocket mode since May, when the uptrend from the 2018 lows finally took off. With the latest surge taking the price through the 2017 high of £22.65, the bullish view is firmly in place once again.

Centrica

There has to be one runt of the litter, and in this group it is Centrica. While the shares have rebounded from the July low, the downtrend of the past six years is firmly in place. Indeed, the rebound to the 50-week simple moving average (SMA) of 89p might provide yet another selling opportunity, if stochastics and moving average convergence divergence (MACD) roll over as they did in 2018. There so far seems little prospect of the trend changing, with no evidence of a test of even the early 2019 high around 126p.

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