Chart of the Day: Utility Play Makes a Stunning Move
This bullpen ETF is starting to turn heads.
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Many investors think of utilities as the most boring of investments — yes, even more boring that fixed income. Though the SPDR Select Sector Fund XLU does share many of the same traits as bonds (cash flows, payouts, sensitivity to interest rates) the ETF has certainly drawn some attention lately from big money investors.
We have been eyeing the XLU for a few months now, looking for an opportunity to add the ETF to the portfolio. A recent surge in the spring looked promising but the XLU ripped higher and has not relented. In fact, the chart shows the XLU building a nice long base following that push higher in April, a stunning move of nearly 15% from the lows in early April.
Utilities just do not move like that on a regular basis, but when the conditions are right (data centers need more power for AI, among other factors) and yields are attractive, we see money flowing into these rather conservative companies.
Money flows as mentioned have been strong, we see that from the Chaikin money flow at the bottom. Further, price action remains bullish and has been since mid-May, MACD is still on a buy signal. A break above $81 convincingly will set the XLU up for a move towards $87 or higher.
We do not hold the XLU in TheStreet Pro portfolio but are watching it from the bullpen.
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