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.
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Harry Richardson — Algorithmic Trader & Strategy Developer Harry is an algorithmic trader specializing in impulse and breakout trading strategies across cryptocurrency and equity markets. With more than 10 years of experience in developing automated trading systems, he focuses on building structured algorithms designed to capture momentum while maintaining strict risk control. His approach combines quantitative analysis, real-market execution, and continuous performance monitoring. Vitalii prioritizes risk management, drawdown control, and strategy stability over short-term optimization, ensuring algorithms are adaptable to changing market conditions. He has developed and tested hundreds of automated strategies, working extensively with live trading environments, forward testing, and portfolio-level algorithm management. His work centers on transforming trading ideas into fully operational, scalable automated systems.
XLU in upward trend: price may jump up because it broke 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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