Utilities sector ETF (XLU) hugging the upper rail of an upward sloped channel
Normally, I look for signals on stocks or ETFs that are hitting the lower rail of upward sloped channels, but the Utilities Select Sector SPDR Fund (NYSE: XLU) got my attention yesterday as it is up near the upper rail of a trend channel. In the case of the XLU, it has been known to stay up close to the upper rail depending upon the risk appetite of investors.
We see on the chart below how the channel formed in the second quarter before falling in December to form the lower rail. If you consider how the overall market fell in the fourth quarter—first in October and then falling farther in December, the utilities sector held up well, until December.
The lower rail formed with a trio of dips in late December and early January. From that point, the XLU has been moving higher and it even held up and moved higher in the first week of March as the rest of the market was pulling back.
The Tickeron AI Trend Prediction tool generated a bullish signal on the XLU on March 13 and that signal had a confidence level of 83%. Previous predictions for the XLU have been accurate 87% of the time. In this case, the prediction is calling for the XLU to move at least 4% higher within the next month.
I have a theory on the utilities sector and how it outperformed the overall market throughout most of the fourth quarter. When investors get nervous about stocks, they don’t jump out of all stocks at first. The first move is to get out of riskier sectors like tech, energy, and consumer discretionary.
Some investors move money out of these sectors and into the utilities sector so as to have money in stocks still. At some point, investors give in to the drop in the market and get out of everything—including utilities. But the utilities sector is usually the last hope. Once investors start jumping out of utilities, it is usually a capitulation point in my view.
XLU in downward trend: price may decline as a result of having broken its higher Bollinger Band on June 24, 2025
XLU broke above its upper Bollinger Band on June 24, 2025. 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. The A.I.dvisor looked at 34 similar instances where the stock broke above the upper band. In of the 34 cases the stock fell afterwards. This puts the odds of success at .
Technical Analysis (Indicators)
Bearish Trend Analysis
The Stochastic Oscillator may be shifting from an upward trend to a downward trend. In of 64 cases where XLU's Stochastic Oscillator exited the overbought zone, the price fell further within the following month. The odds of a continued downward trend are .
The Momentum Indicator moved below the 0 level on June 27, 2025. You may want to consider selling the stock, shorting the stock, or exploring put options on XLU as a result. In of 90 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for XLU turned negative on May 28, 2025. 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 41 similar instances when the indicator turned negative. In of the 41 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 .
Bullish Trend Analysis
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where XLU advanced for three days, in of 322 cases, the price rose further within the following month. 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 .
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