In trading on Tuesday, shares of Cheniere Energy Inc. (AMEX:LNG) entered into overbought territory, changing hands as high as $12.86 per share. We define overbought territory using the Relative Strength Index, or RSI, which is a technical analysis indicator used to measure momentum on a scale of zero to 100. A stock is considered to be overbought if the RSI reading rises above 70.
In the case of Cheniere Energy Inc., the RSI reading has hit 70.8 — by comparison, the universe of energy stocks covered by Energy Stock Channel currently has an average RSI of 49.0, the RSI of WTI Crude Oil is at 61.3, and the RSI of Henry Hub Natural Gas is presently 42.9.
A bearish investor could look at LNG's 70.8 reading as a sign that the recent heavy buying is in the process of exhausting itself, and shares are due for a pullback.
Looking at a chart of one year performance (below), LNG's low point in its 52 week range is $3.17 per share, with $12.86 as the 52 week high point — that compares with a last trade of $11.91. Cheniere Energy Inc. shares are currently trading up about 3.8% on the day.
LNG operates in the Oil & Gas Equipment & Services sector, among companies like Markwest Energy Partners L.P. (NYSE:MWE) which is off about 1.6% today, and Boardwalk Pipeline Partners LP (NYSE:BWP) trading lower by about 1.3%. Below is a three month price history chart comparing the stock performance of LNG, versus MWE and BWP.
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