Highlighting the positive technical evidence for Utilities.
With broader US Equities showing mixed results this week through Thursday’s close, among the sectors to outpace all the major indices were Industrials (XLI), Technology (XLK), and Utilities (XLU). Though not quite seeing the same type of rally during the past 30 days as industrials and technology, utilities are the best performing broad sector on a year-to-date basis and second best during the past 90-day roll, lagging only staples.
On the default point and figure chart, the Utilities Select Sector SPDR Fund (XLU) broke a quadruple top to return to a buy signal and flip the trend back to positive during Tuesday’s trading. This brought XLU up to its highest fund score above 4 since November last year, mirroring score action that has transpired within the broader sector group on the Asset Class Group Scores page. Looking at the Sector View on the Asset Class Group Scores reveals Utilities have been the top scoring sector group and third highest group among all 134 asset groups since last Thursday’s action.
Examining the broader US sector indicators like the 10-week (TW), 30-week, 40-week, bullish percents (BPs), positive trend (PTs) reveals that Utilities maintain the highest readings among these indicators, noting high participation from stocks. The most intriguing increase week over week for Utilities indicators likely occurred on the RS in Xs indicator (^RSXECUTILITY), which measures the percentage of stocks maintaining near-term positive relative strength against the market as defined by the S&P 500 Equal Weight Index (SPXEWI). As broad US Equities rallied during the past two weeks, the RS in Xs indicator for Utilities continued to increase, suggesting more stocks were showing near-term trends of outperformance against the market. Following Tuesday’s action, the indicator climbed above 76%, just one box below the January 2019 high mark. Though seeing this particular indicator near these levels may seem somewhat ominous looking at prior instances of high readings, understanding the elevated levels of this and other Utilities indicators displaying high levels of participation is key for sector selection. Along with the sector ranking highly within DALI and the Asset Class Group Scores places Utilities as a potential space for individual equity opportunities.
Utilizing the Security Screener users can cull out potential ideas. The criteria used today focuses on stocks that contribute to the highest levels of participation within the broader Utilities sector. The table below consists of 19 stocks, and two of the notable names are discussed below.
Criteria:
- Broad Sector: Utilities
- Optionable Only
- Average Volume: 100,000 Shares
- Security Type: Stock
- Technical Attribute(s): 3, 4, and 5
- Trend: Positive
- Signal: Buy
- Relative Strength Chart (Mkt) Column: Xs
- Yield: Greater than 1%
Nisource NI – NI is a 4 for 5’er that has maintained a positive trend on its default point and figure chart since May 2012 and a buy signal for more than 12 months. From a relative standpoint, NI has sustained positive near-term market RS since November last year, and a long-term RS buy signal since March. The stock also resides within the top quartile of the Gas Utilities matrix and has maintained a long-term peer RS buy signal since March 2012. After rallying to a new all-time high on the trend chart during early March of this year, NI pulled back along with the broader market before the chart returned to a column of Xs in mid-April. Recent action brought the stock above $40 and just one box below the all-time chart high. Those seeking exposure to NI could consider the stock here as it trades near the middle of the 10-week trading band and weekly momentum has flipped back positive. Initial support can be found at $36, while additional support may be seen from prior resistance in the lower $30s. NI is up 6.7% during the last 30 day rolling period and up 7.7% year-to-date. The stock is accompanied by a current yield of 2.8%.
Duke Energy DUK – DUK is a 3 for 5’er that has maintained a positive trend on the default point and figure chart since November 2023 and a buy signal since mid-March. From a relative strength standpoint, DUK has maintained positive near-term market RS since August 2024 and near-term peer RS since September 2024 while currently ranking within the top quartile of the Electric Utilities matrix. On the trend chart, DUK rallied to a new all-time chart high at $124 in early April before pulling back along with the broader market. After shifting back to a column of Xs in mid-April, DUK rallied to match its all-time chart high at the beginning of May. Those seeking exposure to DUK could consider the stock in the mid $120 to upper $110 range. Initial support lies at $112, while additional may be found at $106 and $102, the bullish support line. Year-to-date, DUK is up over 11%, and the stock maintains a current yield of roughly 3.5%.
