XLU trade ideas
XLU Map
I would have thought 50 could retain.
This index is one that makes me cautious on shorts as the final target could be 55 and that can't happen before June.
if 50 retains ok on shorts.
XLU - Utilities - SHORTXLU
1 - Hitting hard in weekly bollinger.
2 - climax style
3 - 5 waves up since july
4 - 21% since july15
5 - Hitting trendline taking all tops in logarithmic since feb10 (115% up since)
These are utlities... They enjoyed better traction in the most defensive part of the rally... it is likely over or close to
Update on $XLU: Prepare to Take Profit and Take it QuickHi Fellow Risk Takers,
Here is a an update on the Long Utilities ETF that I posted a while back.
The information is intended for those who do short to mid term trading and are currently holding long positions on $XLU.
If you have no position and are considering to go long, it might be better to stay on the sidelines and watch.
It might not be a good idea to enter long now, when this update is about taking profit.
(1) Trend is intact as always and overall environment is bullish.
(2) Price has accelerated above the upper trend channel in (1) and the rise in price is analogous to a vertical takeoff of a space shuttle.
One key characteristic of this accelerated price chart pattern is that the up move is unsustainable.
In other words, price is unlikely to keep on moving higher vertically forever.
Also we can expect sharp sell off the moment price has exhausted upward momentum (Example in Reference section).
Therefore the main idea here is to take profit before sell off.
Simple Profit Taking:
Close position when price is around $50.
Take note that $50 is simply a psychological price level, as human nature have the tendency to place significance to round numbers.
Advanced Profit Taking:
Close position when RSI(14) is about to reach 75.
The main concept is to take profit as close to the Resistance Level of the RSI Oscillator.
Time Limitation:
All long positions should be closed out by 06 Jan 2014, if the $50 or RSi level 75 has not reached by then.
References:
Example of Sharp sell-off After Acceleration: farm4.staticflickr.com
Accelerating Price Chart Pattern> blog.forex4you.com
Using Support and Resistance Levels of Relative Strength Index> Technical Analysis for the Trading Professional by Constance Brown, Chapter 1: Oscillators Do Not Travel between 0 and 100.
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S&P Sector Review - A Look at Relative PerformanceThe charts above show the performance of each sector relative to all nine sectors combined. XLK tech couldn't be included due to having only 8 panes but it was included in determining the sector ratios. Important to keep in mind that these are ratios, all prices could go lower or higher together but what I'm interested in here is purely the relative performance. Also, in order for one to outperform is ensuring that another sector somewhere is underperforming.
Top Row:
XLU Utilities, XLP Consumer staples, XLF financials and XLV Health are all breaking out on a relative basis. 3 of 4 can be considered defensive sectors. Financials are interesting in that the sector was completely demolished after the 2008 recession and appear to be breaking out of a 5 yr wedge.
Bottom Row:
XLE Energy issues are widely known. Not much to say other then its possible that they go lower longer term and return to previous levels (.10-.12 of the total). The "energy commodities are an asset class" theme may finally be unwound and if so XLE could suffer from underperformance for some time (oversold bounces excluded). XLB materials have not broken down yet but look quite vulnerable. XLY Consumer discretionary did break down and may have recently been saved by the plunge in oil. Any economic weakness and i suspect this will quickly revert and this sector could significantly underperform. XLI Industrials looks like it could break out but has not yet. The transportation portion of this sector has significantly helped this sector.
Summary:
XLU - breaking out upwards, 6 yr wedge
XLP - breaking out upwards, 6 yr wedge
XLF - breaking out upwards, 5 yr wedge
XLV - breaking upper trend line important since 2011
XLE - broke out down, 6 yr wedge, approaching possible long term support
XLB - approaching bottom trend line important since 2002
XLY - broke ascending wedge lower, recently bounced back towards 2013 highs
XLI - sitting at upper trend line that has been important since 2000
XLK - Not shown
Go Long on Utilities XLU, If You've Missed Shorting Oil Following OPEC's decision to not to reduce Crude oil production on 27 Nov 2014 Thursday, we note a steep drop on Oil related stocks (ie XOP) on Black Friday Morning.
Share prices of Airlines have also continued rally on the upside (ie DAL).
While we may run the risks of pullbacks if we were to join the Short Oil/ Long Airlines positions, here is an idea on Utilities Select Sector ETF (XLU), which is poised to follow suit for a breakout.
(1) Price has traded steadily in an upwards trend channel starting from June 2010 and up till now. Price has risen from about $28.00 to $46.00 now, trading and sustaining past the 2008 high of $44.40.
(2) Starting from 19 June 2013, we note an acceleration trend line has been formed, based on the lows of the prices, marked by the purple line.
This acceleration of prices has brought prices to break out of the upper trend line of the channel, for the second time.
It is an indication that market is gaining momentum for a strong vertical breakout in prices on the upside.
Seasoned Elliott wave traders should also recognize that a potential 5th Impulse wave will be formed upon breakout.
(Projection)
Very Bullish: From observations raised in points (1) and (2), we conclude that price is most likely to accelerate further from current price level and "liftoff" to a close to vertical breakout on the upside.
(Stop Loss)
Below $44.80.
(Target)
$50.00. (About 8% return from current price levels)
(Time Limitation)
This vertical breakout should reach the price target by 06 Jan 2015.
(Risk)
There is always the risk of a false breakout, where price will be resisted at the previous high of around $46.60s.
References:
News on OPEC's Decision
www.bloomberg.com
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No jinx for Utilities sector?Interestingly, when i did the S&P sector comparison 11 days ago,
the 3 strongest are Healthcare, Technology & Utilities.
Right after that Healthcare & Technology sectors are being wallop.
So the utilities sector is the only strong one standing now. And it is engaging in triangle consolidation.
I hope i am not a jinx to utilities sector.
Utilities are topping tooThis is an obvious top for the utilities sector. A weird H&S pattern at the all time high, with bearish divergences on Force Index and a change in behavior on the Weis Wave.
The moves on the Utilities sector are very volatile, and I wouldn't trade them. I believe there are better opportunities to short this market. This is a chart just to show another top in a sector.
The monthly chart also shows a massive change in behavior
XLU BEARISH NOWwith interest rates in play not surprising utilities
are getting a haircut as interest rates will impact their
margins. A break below Fridays close and I target
the 37 dollar area
Utilities Select Sector SPDR XLU Daily Rally Has Reached ....Utilities have had a strong 17% rally from the January low as investors have piled into the sector chasing attractive yields relative to T-Bonds. Investors have also been getting out of high flyers and getting into basic industries like oil companies and utilities. Now the odds are stacked against XLU here with downside support 5% away and upside potential only another 2% above current levels. It looks like it is time to exit any longs or sell call options against positions, at the money. If shorting, 44.5 stop loss, 41.10 target. 43.14 last.
XLU LONGWith the horrible jobs numbers for DEC and
great activity in the bond market fund managers
are nibbling at defensive stocks. XLU was the
strongest sector last week in the SP. XLU rose in
heavy volume. I am waiting and watching though
for a little more momentum and a Awesome Oscillator
Saucer Cross. The first green bar cross I will set a buy
stop.
Sector: Utilities - Triangle Breakout, but Gartley reversalZone congestion suggests possible failure
