“High Flyer” Case Study: VST on 9/25/24

VST (Vistra) has been a top performer this year, and is up ~6% today (as of 2:30pm) in the context of a modestly lower S&P 500.  Though we lack VecEvents for Vistra we use the V-Score closest comparables and Vector Strength Histogram to seek some cognition of risk and opportunity, or at least questions to follow up on.

The V-Score for VST coming into today was a 6 (on a -12 to +12 scale). We do not know what it will be when updated for today’s close until we refresh the V-Score this evening (eta 9pm). That is the extent of our directional commentary. Please see terms and conditions for important related disclosures.

The Vector Strength Histogram based on yesterday’s close (9/24/24) reveals gaps in resistance upward from yesterday’s close, with some decent support to the downside

There is support down to $106, then a gap into the high 90’s. There was a single (though strong) vector just above yesterday’s close to the upside, then nothing to $119 area, where we are at presently.

Vector Model and Sigma upside price percentiles are similar for the 10d-63d forward period. To the downside, Vector Model is lower.

Intraday, VST is presently above Sigma’s 99%tile upward or OaR (opportunity at risk) level, but within the Vector Model’s. VST is actually approaching the Vector Model’s (expected up body) for the month forward date of 10/23/24. Expected Down Body for the same period is $104, about $15 lower where VST is currently trading. That said, the identification of early August levels as a more recent bottom may boost that EDB level higher, should the Vector Model algorithm get there in the days ahead.

What has changed in the last month to drive VST from the lowest rung of VS1 to the top of its core?

At $119.50 VST’s price is at the top of the core (the 1.0 level) of vs1, the strongest vector set (see the green star in the chart below). VS1 is anchored by the Jun2022 and May2024 tops and the Sep2022 bottom.

We don’t know the fundamental story with VST beyond that it is commonly said to be a power generator that could benefit from higher electricity demand expected to result from AI.  There was a pullback in AI related names such as NVDA this summer, and perhaps VST got caught up in that sentiment (or perhaps its August earnings report?), driving it lower to the bottom of the levelled down section of VS1. So a rebound in VST as those stocks rebound makes some sense. There was also the Fed cut and a news headline about Microsoft supporting investment in nuclear power. Are those dynamics or anything else I am not aware of enough to justify VST levelling up out of the core of this channel?

V-Score Closest Comparables analysis sees VST as resembling SLV in the aftermath of the April 2011 peak for the forward 2 week to 6 month period, and resembling AVGO circa January 2015 for the forward 6 month to 1 year period.

SLV (the iShares Silver etf) has a history of rare and short lived, but fairly powerful spikes. AVGO (Broadcom) circa 2015 was a fantastic long term performer, up more than 10x since then. As discussed above, I know little of VST, but given its profile as essentially a commodity (electricity) producer for a commodity at the center of a very exciting tech growth story it would be hard to identify two better comparables.

Conclusion

We are not experts in VST but we see the upside potential remaining in its chart. Still, attaining it and sustaining those levels will ultimately require justification for rising beyond the core of VS1. We don’t know enough about VST to say whether or not that is justified, but we see the comparison to SLV post its April 2011 peak as a near term horizon comparable as noteworthy. That said, Identification of the August 2024 low as an official low by the Vector Model algorithm could result in more favorable comparables, so we will be watching for that.