Post Trade Analysis - Constellation Energy (CEG)

What happens when you combine knowledge of secular trends in the market with high probability algorithmic trading setups. You get a 47.7% gain in just 56 days.

Here's how our QUANTAMENTAL scoring system flagged Constellation Energy Group (CEG) for a high-probability trade that turned into a breakout monster.

Company Overview: Constellation Energy Group (CEG)

Constellation Energy is the largest producer of carbon-free energy in the U.S., with a dominant portfolio of nuclear, hydro, wind, and solar generation assets. CEG serves both commercial and residential customers, and its strategic positioning at the intersection of clean energy and data infrastructure makes it a future-forward utility play. With rising demand from AI and data centers, CEG is poised to benefit from a secular growth trend in electricity consumption—especially for low-carbon power.

Market Context & Secular Theme

The backdrop for this trade wasn’t just technical, it was secular. Global electricity demand is undergoing a structural acceleration, driven by the exponential growth in AI workloads, cloud computing, and data centers. Industry analysts expect global data center power usage to double by 2030, making power—especially clean power—a high-value commodity.

Governments and corporations are racing to meet aggressive decarbonization goals, and that puts carbon-free baseload energy at the center of the story. Among all clean energy sources, nuclear stands out as the only scalable, 24/7 zero-emission power solution.

CEG is uniquely positioned here. With its dominant nuclear fleet and long-term utility contracts, it’s not just a power company, it’s a core enabler of the AI revolution. The Microsoft Three Mile Island deal that catalyzed this trade is a perfect example of this trend playing out in real time. As hyperscale demand explodes, the market is beginning to reprice nuclear’ s role in the clean energy transition.

The Setup: Spotting the Opportunity

After peaking on May 24, 2024, CEG had climbed to match 12-month average analyst price targets. This indicated the stock had run into a potential near term ceiling which can often trigger a cooling-off period.

What followed was a slow, grinding pullback over the next two months, eventually pushing RSI below 30 on July 25—our first technical alert. On July 29, RSI crossed back above 30, and our QUANTAMENTAL score flashed a 10 out of 15.

While not a perfect score, a 10 still meets our threshold for bullish setups—and this trade is a strong example of how even non-bullseye scores can deliver powerful returns when combined with the knowledge of secular trends in the market. Our system flagged the stock as oversold, fundamentally sound, and poised for mean reversion, especially when combine with the long term nuclear energy outlook.

Executing the Trade: Entry & Exit

We entered the trade on July 29, just as RSI confirmed our oversold reversal signal.

Although CEG attempted a rally shortly after entry, it wasn’t until August 5 that the real pivot occurred. The stock had a massive 9% reversal candle off its 200-day moving average, locking in what would be the cycle low. From there, CEG climbed steadily, hugging the 5-day moving average in a strong uptrend.

Initially, it met resistance at its 100-day moving average, prompting a brief pullback to the 200DMA—a textbook bullish retest.

But the real fireworks started in mid-September. On September 20, news broke of a major partnership with Microsoft to reopen the Three Mile Island nuclear facility to power a next-gen data center. The stock gapped up and closed +22% on the day, breaking through key resistance with conviction.

We exited the next trading day, locking in a 47.7% gain over 56 days—an outstanding annualized return of over 300%.

QUANTAMENTAL Scoring Review

Our proprietary scoring system combines technical, macro, and fundamental data to identify asymmetric risk/reward setups. For CEG, it all came together:

Technical Screening System

• Strong Trend Structure: The 50DMA consistently runs above the 200DMA (1 point), and the 100DMA remains above the 200DMA (1 point).

• Positive Momentum: The stock maintains a positive return Year Over Year (1 point).

• RSI Oversold Signal: On July 25, RSI dipped below 30, and crossed back above on July 29—a powerful reversal trigger in our back tests. (1 point)

Earnings Revision Analysis

One of the most powerful drivers of stock price movements is earnings revisions—when analysts raise their future earnings estimates based on strong financial performance.

For CEG, we analyzed the earnings estimates for 2024 and saw a clear pattern of upward revisions since early 2023. This was another strong confirmation that CEG was set up for a high-probability, high-reward trade.

Post-Trade Reflections: What This Trade Taught Us

Not every big winner starts with a perfect score. CEG’s score of 10 indicated a bullish setup worth investigating further and underscores the importance of the pairing of fundamental analysis with price action.

This CEG trade reinforces a core principle in our approach: oversold setups in fundamentally strong stocks often present outsized opportunities—especially when paired with secular tailwinds and news catalysts.

The initial pullback was largely driven by general market weakness, not company-specific fundamentals. By ignoring the noise and relying on our quantitative scoring model, we were positioned early—before the crowd.

While earnings didn’t drive the move, the news catalyst on September 20 was a structural game-changer. The Microsoft deal to power a data center using nuclear energy tapped into the AI-fueled data center trend while reinforcing CEG’s strategic importance in clean energy. The market responded accordingly.

The surprise breakout wasn’t something we could have predicted in advance. But by being in the trade already, we were perfectly positioned to benefit when the narrative shifted. That’s the power of disciplined setup-based entries.

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Disclaimer: This post is not financial advice. The stock market is risky, and any trade or investment may result in partial or total loss. Please do your own due diligence before making trades. Do not use this information for investment decisions.