Holding $42, The Southern Company (NYSE: SO) can still hit a new high
Denver, CO, 07/26/2013 (Avauncer.com) – The Southern Company (NYSE: SO) (Closed: $45.14, Up: 0.22%) had a strange day on Thursday as the price made no significant move but the volume at over 12 million was about 3 times higher than the average of 4 million. Normally, with that kind of volume a trending move in either direction is expected which was not the case here. Today’s session might show the way the price wants to go next.
The stock is in a big bull market since the 2001 bottom of $21. It corrected about two third in the bear market of 2008, but soon resumed its rally from the 2009 bottom of $26.48. This latest bull run is contained in a huge rising channel and the latest low of June 2013 has been made exactly on the lower boundary of this channel. That makes the June low of $42.32 very significant for keeping the major uptrend intact. The stock made a high at $48.59 in July 2012 and after a perfect 3 wave Zigzag correction, made another high at $48.74 in April 2013. This Double Top will be activated only when the zone of $41.75 - $42.32 is broken. The price action from the 2012 top has fulfilled all the minimum requirements of a Flat correction. If that truly is the case, then the implication would be very bullish as it shows tremendous strength in the long term. A new high would be expected soon in that case.
The last fall from $48.74 also subdivides into 5 waves. That could either be the C leg of the Flat mentioned above or the first wave of a fresh down leg. The indicators, though mainly neutral, show a slight bullish bias till now. We remain bullish as long as $42.32 remains intact. Bullish momentum will increase above $45.75 and if $44.49 is not touched before a new high above $45.75.