Utilities Sector ETF (USA): Long-Term Reversal

Relatively speaking, the Utilities sector has been underperforming the market for many months. So from that viewpoint the sector has not been a good investment option. From an absolute viewpoint things are just as worse. Prices are engaged in a fierce daily down trend since late 2017 during which weekly support levels have been taken out.

Prices have reached the trend line of 2013 at ~48.20. Even though the importance of such lines is limited, they do tend to trigger a bit of a reaction. In other words, a minor bounce or consolidation can be expected. however, any recovery up to 52.30 will not alter the daily or weekly dynamics. We remain negative and expect a continuation of the bearish sentiment for the coming months. 45.50 (minor) and 42.25 (major) are the levels to watch out for.

Avoid long-exposure in the sector or, if you prefer short-exposure in the market, sell the rallies up to 52.30. Above that level we return to neutral, not positive.

  • Primary trend: neutral/negative
  • Outlook:¬†trend reversal, negative as long as 52.30 holds
  • Strategy: avoid or sell the rallies
  • Support: 48.20 / 45.50 / 42.25-
  • Resistance: 50.25 / 51.55 / 52.30 / 52.75+
  • Outlook cancelled/neutralized above 52.30
  • Description:¬†Utilities Select Sector SPDR Fund (XLU). The Fund’s objective is to provide investment results that correspond to the performance of The Utilities Select Sector Index. The Index includes communication services, electrical power providers and natural gas distributors.
  • Total assets: USD 7.4 bln
  • Expense ratio: 0.13%
  • Dividend Yield (gross yield): 4.2%

Weekly chart Utilities Select Sector SPDR Fund (XLU)