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Oct 08, 2020

10 of the 11 Sector SPDR ETFs Have Fallen in the Last Month with Earnings Just Around the Corner

Many investors probably think the month of October is the worst month for stocks due to the crashes in 1929 and 1987. In fact the month of September has historically been the worst month for equities and this year was no exception. The S&P 500 lost ground during the month and that snapped a five-month winning streak. Looking at the 11 main sectors and the SPDR ETFs that represent them, only the utilities sector moved higher in September.

I took these screenshots from the Tickeron screener for the 11 Select Sector SPDR ETFs. The screener does update during trading hours, so I should point out that I took these shots in the early trading session from October 2. We see that the Utilities Select Sector SPDR (XLU) gained 0.23% in the past month as the top performer of the group. The second best performance was the Real Estate Select Sector SPDR (XLRE), but that was a loss of 2.8%. In fact, the top six of the SPDRs are show below and the sixth place performance showed a decline of 3.91% from the Healthcare Select Sector SPDR (XLV).

This second screenshot shows the worst five performers of the Select Sector SPDRs. Not surprisingly, the Energy Select Sector SPDR (XLE) is the worst performer, and it’s not even close. The XLE lost 16.87% as oil prices fell. That loss was twice as bad as the second worst performance. The Communication Services Select Sector SPDR (XLC) fell 7.96% and the Technology Select Sector SPDR fell 7.93% as the second and third worst performers over the past month.

Looking at the monthly charts for the 11 ETFs, and specifically the monthly stochastic readings, we see that six are in overbought territory and one is near overbought territory. Three sectors have readings in the middle range and one, energy, is closer to oversold territory. The selling in February and March caused most of the indicators to drop, but because it was a short-lived selloff, most of the indicators never even dropped below the 50 level.

The sharp rallies back from the March lows caused many of the indicators to jump back up to overbought territory. Now the September losses have caused seven of the sector SPDRs to generate bearish crossovers in the monthly stochastic indicators. These bearish crossovers haven’t been the most reliable signals over the years, but it is certainly something investors should keep an eye on with so many crossovers taking place at the same time.

Something else investors need to keep in mind is that earnings season is right around the corner. Big banks will get things started on October 13. The outlook for third quarter results is pretty bad. For S&P 500 members, earnings are expected to decline by 21.7% overall. This is compared to Q3 2019.

The energy sector does weigh things down a little and if companies from the sector are removed from the outlook, it improves to -18.1%. The tech sector has the best outlook for earnings results, but that is still a decline of 1.0% on the quarter. The healthcare sector is expected to see earnings decline by 2.2% and that is the second best outlook.

If the low expectations are priced in accordingly, it could actually help stocks once the results are released. When investor expectations are so low, it becomes easier for companies to exceed expectations. Of course a great deal of the drop in earnings is attributed to the COVID-19 pandemic and that impact is expected to diminish in the next few quarters. This means the outlooks companies provide for Q4 and Q1 2021 will be closely watched. The outlooks could be even more important than the results for Q3 in terms of how investors react.

Personally I think investors need to be cautious right now. The rally off the March lows has been rapid and it has occurred on the presumption that the effects of the pandemic will be short lived. If the outlooks point to anything different, we could see declines that erase a great deal of the gains from the last six months.

Related Ticker: XLU

XLU's RSI Indicator recovers from oversold territory

The RSI Indicator for XLU moved out of oversold territory on January 25, 2024. This could be a sign that the stock is shifting from a downward trend to an upward trend. Traders may want to buy the stock or call options. The A.I.dvisor looked at 25 similar instances when the indicator left oversold territory. In of the 25 cases the stock moved higher. This puts the odds of a move higher at .

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The Momentum Indicator moved above the 0 level on February 20, 2024. You may want to consider a long position or call options on XLU as a result. In of 97 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .

The Moving Average Convergence Divergence (MACD) for XLU just turned positive on February 15, 2024. Looking at past instances where XLU's MACD turned positive, the stock continued to rise in of 45 cases over the following month. The odds of a continued upward trend are .

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where XLU advanced for three days, in of 336 cases, the price rose further within the following month. The odds of a continued upward trend are .

Bearish Trend Analysis

The Stochastic Oscillator demonstrated that the ticker has stayed in the overbought zone for 6 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.

The 10-day moving average for XLU crossed bearishly below the 50-day moving average on January 23, 2024. This indicates that the trend has shifted lower and could be considered a sell signal. In of 16 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .

Following a 3-day decline, the stock is projected to fall further. Considering past instances where XLU declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .

The Aroon Indicator for XLU entered a downward trend on February 22, 2024. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.

Fundamental Analysis (Ratings)

Fear & Greed

Notable companies

The most notable companies in this group are Nextera Energy Inc (NYSE:NEE), Southern Company (The) (NYSE:SO), PG&E Corp (NYSE:PCG), Dominion Energy (NYSE:D), NRG Energy (NYSE:NRG).

Industry description

The investment seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of publicly traded equity securities of companies in the Utilities Select Sector Index. In seeking to track the performance of the index, the fund employs a replication strategy. It generally invests substantially all, but at least 95%, of its total assets in the securities comprising the index. The index includes securities of companies from the following industries: electric utilities; water utilities; multi-utilities; independent power and renewable electricity producers; and gas utilities. The fund is non-diversified.

Market Cap

The average market capitalization across the Utilities Select Sector SPDR® ETF ETF is 35.88B. The market cap for tickers in the group ranges from 7.59B to 112.97B. NEE holds the highest valuation in this group at 112.97B. The lowest valued company is PNW at 7.59B.

High and low price notable news

The average weekly price growth across all stocks in the Utilities Select Sector SPDR® ETF ETF was 0%. For the same ETF, the average monthly price growth was 1%, and the average quarterly price growth was 1%. CEG experienced the highest price growth at 30%, while AES experienced the biggest fall at -9%.


The average weekly volume growth across all stocks in the Utilities Select Sector SPDR® ETF ETF was -56%. For the same stocks of the ETF, the average monthly volume growth was -48% and the average quarterly volume growth was -42%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 58
P/E Growth Rating: 73
Price Growth Rating: 50
SMR Rating: 71
Profit Risk Rating: 54
Seasonality Score: -19 (-100 ... +100)
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General Information

Category Utilities

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Correlation & Price change

A.I.dvisor indicates that over the last year, XLU has been closely correlated with FUTY. These tickers have moved in lockstep 100% of the time. This A.I.-generated data suggests there is a high statistical probability that if XLU jumps, then FUTY could also see price increases.

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