Shares of NuScale Energy bounced back to life on Friday as investors took an opportunity to buy the Small Modular Reactor company’s recent weakness.
NuScale is a key player in the small modular reactor (SMR) energy sector. The stock has experienced a six-month return of more than 80% over the last six months.
SMR’s performance has been driven by several AI companies announcing their intentions to develop small modular reactors as am energy source for data centers.
Investors started to sell into the strength of “Nuclear AI” stocks in December as the rally had extended many of the industries’ names into technically overbought situations.
Since then, NuScale shares have dropped 45% to their recent lows just above $17.50, but that price has technical significance.
Shares of NuScale spent three weeks consolidating at $17.50 In October. The move came ahead of the elections, fortifying a “tradable bottom” for the stock. Technical traders and trading algorithms will often use these historical price patterns to mark buying opportunities for a stock.
Friday’s rally moved shares of NuScale back above its $20 price, a level that is considered psychologically significant for the stock, but there’s a challenge ahead.
Shares stalled their one-day rally at the stock’s 20-day moving average. That trendline is currently in a short-term bearish pattern at $21.00, Friday’s high.
A move above this trendline next week should put the stock on path to cross back above its bullish 50-day moving average at $22.50. A successful cross above that trendline will put the buyers back in control of NuScale Energy stock.
From a long-term perspective, NuScale shares maintain a bullish outlook with a price target of $50.00.
