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.
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XLU in upward trend: price expected to rise as it breaks its lower Bollinger Band on September 14, 2026
XLU may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options. In 29 of 32 cases where XLU's price broke its lower Bollinger Band, its price rose further in the following month. The odds of a continued upward trend are 90%.
Technical Analysis (Indicators)
Bullish Trend Analysis
The RSI Oscillator points to a transition from a downward trend to an upward trend -- in cases where XLU's RSI Oscillator exited the oversold zone, 26 of 29 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are 90%.
The Stochastic Oscillator suggests the stock price trend may be in a reversal from a downward trend to an upward trend. 42 of 50 cases where XLU's Stochastic Oscillator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are 84%.
The Moving Average Convergence Divergence (MACD) for XLU just turned positive on October 05, 2026. Looking at past instances where XLU's MACD turned positive, the stock continued to rise in 33 of 41 cases over the following month. The odds of a continued upward trend are 80%.
Following a +0.73% 3-day Advance, the price is estimated to grow further. Considering data from situations where XLU advanced for three days, in 298 of 345 cases, the price rose further within the following month. The odds of a continued upward trend are 86%.
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on September 09, 2026. You may want to consider selling the stock, shorting the stock, or exploring put options on XLU as a result. In 67 of 86 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are 78%.
The 50-day moving average for XLU moved below the 200-day moving average on September 08, 2026. This could be a long-term bearish signal for the stock as the stock shifts to an downward trend.
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 50 of 62 cases within the following month. The odds of a continued downward trend are 85%.
The Aroon Indicator for XLU entered a downward trend on September 28, 2026. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
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