Utilities ETF (XLU) hits lower rail of upwardly sloped channel and gets a bullish signal
The utilities sector is often viewed as a safety sector, offering less risk than the more cyclical sectors. With the overall market moving higher over the last three weeks, utilities have lagged the other sectors. The Utilities Select Sector SPDR (NYSE: XLU) has dropped 1.3% since July 8 and that is the worst performance among the 10 main sector SPDRs.
While the XLU has lagged in the last few weeks, the slight decline has allowed a couple of trend lines to catch up to the fund. The first one is the 50-day moving average and the ETF just hit it in the last few days. The second trend line is actually the lower rail of an upwardly sloped channel. We see that the line connects the lows from May and June while the upper rail connects the highs from April, May, and June.
When the XLU dropped to its low on May 9 that formed the first point of the lower rail and the fund jumped over 6% in just over two weeks. The second point that helped form the lower rail was on June 4 and after hitting that low the fund jumped 5.87% in three trading days.
The Tickeron Trend Prediction Engine generated a bullish signal for the XLU on July 25 and the signal showed a confidence level of 84%. The signal calls for a gain of at least 4% within the next month. Past predictions on the XLU have been successful 90% of the time.
From a fundamental standpoint, utilities may become more attractive as it appears as if the Fed will cut rates at the July meeting. When the Fed cuts rates, utility stocks become more attractive for the yields the dividends provide.
XLU in +2.44% Uptrend, rising for three consecutive days on October 16, 2024
Moving higher for three straight days is viewed as a bullish sign. Keep an eye on this stock for future growth. Considering data from situations where XLU advanced for three days, in of 339 cases, the price rose further within the following month. The odds of a continued upward trend are .
Technical Analysis (Indicators)
Bullish Trend Analysis
The Momentum Indicator moved above the 0 level on October 16, 2024. You may want to consider a long position or call options on XLU as a result. In of 92 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .
The Aroon Indicator entered an Uptrend today. In of 308 cases where XLU Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
Bearish Trend Analysis
The RSI Indicator demonstrated that the stock has entered the overbought zone. This may point to a price pull-back soon.
The Stochastic Oscillator entered the overbought zone. Expect a price pull-back in the foreseeable future.
The Moving Average Convergence Divergence Histogram (MACD) for XLU turned negative on October 07, 2024. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 42 similar instances when the indicator turned negative. In of the 42 cases the stock turned lower in the days that followed. This puts the odds of success at .
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 .
XLU broke above its upper Bollinger Band on September 20, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
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Category Utilities