How to Play AES

Published on Wednesday, 29 June 2011 08:00 Written by TradersHuddle Staff

New York, June 29th (TradersHuddle.com) - Shares of AES Corporation (NYSE:AES) closed the trading session at $12.46 near its 50 day and 200 day moving averages currently set at $12.64 and $12.29 respectively. AES's price action is above the 200 day moving average but below its 50 day moving average, signaling a possible break out.

AES Corporation (NYSE:AES), together with its subsidiaries, engages in the generation and distribution of electricity in Asia, North America, Europe, Latin America, and Africa. The Company sells electricity under long term contracts and serves customers under its regulated utility businesses.The company generates electricity through various resources, including coal, gas, and fuel oil, as well as hydro, wind, and solar.

AES price action seems to be setting up for a tight range between the 200 day moving average as support and the 50 day moving average serving as resistance.

A tiered approach to enter the stock, appears to be the best way to maximize possible movements from the stock, as traders could enter AES with a small position and wait for the stock to break out above the 50 day moving average at $12.64, where traders could add to their position as momentum builds with the breakout. The flip side will be if support being referenced at the 200 day moving average set at $12.29 breaks it could mean further downside in the horizon for AES.