In trading on Friday, shares of Alon USA Energy Inc (NYSE: ALJ) entered into overbought territory, changing hands as high as $11.64 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 Alon USA Energy Inc, the RSI reading has hit 73.7 — by comparison, the universe of energy stocks covered by Energy Stock Channel currently has an average RSI of 55.9, the RSI of WTI Crude Oil is at 60.6, and the RSI of Henry Hub Natural Gas is presently 53.9.
A bearish investor could look at ALJ's 73.7 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), ALJ's low point in its 52 week range is $5.20 per share, with $15.58 as the 52 week high point — that compares with a last trade of $11.70. Alon USA Energy Inc shares are currently trading up about 47.1% on the day.
ALJ operates in the Oil & Gas Refining & Marketing sector, among companies like Mission NewEnergy Ltd (NASD: MNEL) which is off about 4.2% today, and BioFuel Energy Corp (NASD: BIOF) trading up by about 9.6%. Below is a three month price history chart comparing the stock performance of ALJ, versus MNEL and BIOF.