AYE - Allegheny Energy, Inc. $51.84 +0.26 (+0.84)

Tuesday's Comment:

Allegheny Energy, Inc. sold off slightly on Tuesday after closing at an all-time high of $52 in the previous session. Shares of AYE traded in a tight range, hitting an intra-day high of $51.80 and an intra-day low of $51.15, before closing at $51.58 on volume of 413,000 shares. Volume has stabilized following the secondary offering on April 27th so AYE may be able to rally as we move closer to the Annual Meeting on Thursday. We are looking for a split announcement out of the meeting. Until then, support is the 5-dma at $50.97 with stronger support at $50.50, the 10-dma. Resistance has moved up to Monday's intra-day high of $52 and then possibly $53 or $54. Look for a bounce off of $50.97 or a move above $52 on midday volume of at least 300,000 shares before opening new positions. Our stops remain at $47.

Wednesday's Update:

Shares of AYE marched higher on Wednesday and now lay just $0.16 off its all-time high of $52 set on Monday. The energy company may now be benefiting from the onslaught of the air conditioning season in the Northeast. As everyone knows, air conditioners are energy companies' best friends. Turning to recent news in AYE, investors got to see the softer side of the company on Tuesday, as it reported that it is partnering with government agencies to absorb carbon dioxide from strip-mined areas. This program is the first of its kind and is part of AYE's ongoing effort to be at the forefront of environmental issues. Getting back to Allegheny's chart, we can see that another breakout may soon occur with a burst above $52 on strong volume. If AYE can get above this hurdle on at least 560,000 shares, traders could take this opportunity to initiate new positions. Otherwise, a pullback to support of $50, with a subsequent bounce might also mark another lower-risk entry point. We are keeping our stops at $47.oo to protect against a reversal.

Picked on April 29th @ $50.60 Change since picked +1.24 Stop Loss @ $47.00

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