Love Is All Around — And 'AI Play' Utilities Become Especially Hard to Resist
Can you feel it? Slowly the bulls are coming back in. The real excitement, though, is with the Utes, but too much affection is not always a good thing.
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Folks are kinda bullish again. You can feel it all around you. But we can see it in the statistics too. Heck, I don’t discuss the put/call ratio much anymore because it barely budges. It hasn’t had a reading under 0.90 in nearly a month. Yet on Thursday it did just that.
I don’t know that we should make a fuss over it because it’s not extreme at all, but maybe it’s a smidge more call buying than we have seen.
The American Association of Individual Investors (AAII) bulls notched up to 50% but it was the plunge in bears that caught my eye as they fell nearly nine points to 23.8%. Slowly folks are coming back in.
Then there are the folks at the National Association of Active Investment Managers (NAAIM), who had pushed their exposure down to 59 in late April and are now back at 91.
But the real excitement comes from the Utes. They have been green for seven straight days. And you can see below, if you use the actual Dow Jones Utilities and not the Utlities Select Sector SPDR Fund XLU, they are at resistance. I do hope you will recall that back in February when the Utes appeared to be breaking down I liked them. I thought they had done enough work on the downside.
At the time I heard screaming and hysteria over the Utes. People who never even noticed the Utes were saying how bearish they were. But now, with the Utes up 15% since then I hear not only love for them but wait, there’s a narrative about why they are so great!
You see, they are the new way to play AI I am told. Data centers need a lot of electricity and lo and behold, who produces all that electricity? Why, it’s the Utes.
My memory is not what it used to be but some will recall but there was another time when folks glommed onto the Utes because all that bitcoin mining was going to increase our electric bills. Or so the story went. The Utes went down anyway.
We all know I am terrible at narratives. I’m better at just looking at charts and this one is at resistance with too much love. It needs a pullback.
Away from that the Oscillator is still overbought and what’s really curious is that breadth remains good, making new highs (bullish) but the number of stocks making new highs hasn’t increased this week. I believe that is a function of all those stocks that are stuck in those wide ranges all year and tech stocks faltering.
Speaking of tech stocks, did you notice how many of them were down on Thursday and no one seemed to care? They have their new shiny Utes to love now!
