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SPDR Select Sector Fund - Utilities

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XLU trade ideas

XLU & NEE - What happened to utilities?This has been a rough month for utilities. We might be due for a slight bounce, but this sectors regulated pricing, dependence on debt, and previous attraction to income investors (now better served by treasuries) are all likely to be ongoing headwinds. Some key shifts in trend are highlighted: Beginning of 2022 the Fed starts easing rates higher and begins QT. This makes utilities attractive relative to the S&P Mid-2022, rates continue higher, QT advances, and utilities and the broader market begin to move in correlation October 2022 was peak tightness for global liquidity and some of us believed that we were close to peak rates. The last milestone is where trend in utilities began to shift. QT pauses at this point and global net liquidity expands. This sends growth oriented equites to the performance that we witnessed through July 2023, and marks a time that I wished I started shorting utilities. Note that SDP (ultra short utilities) appears to be in a parabolic wave 5. This makes me suspect potential for a reversal and a bounce in utilities, but I would view this as an opportunity to exit and reconsider either XLU or SDP after the ABC correction.
AMEX:XLULong
by Ben_1148x2
A MAJOR BOTTOM is now setting up 54 handle or the alt 51 BUYING The chart posted is the of the XLU we had a very clear 5 waves up from oct 2002 and we are nearing the long term trendline 21 yrs long and a .382 retracement . it has dropped in the form of an abc decline and a triangle to form wave X or B I tend to view it as an X since the peak on july 26th it has a classic ABC decline and it is now 70.2 days long most panics take 55/62 days and in 1929 lasted 72 days and the bulk of the panic the damage was in 8 to 13 td we made the low so far on day 13 .I am now in calls net long at 90 % in the money mid spring 2024 and will move to 100 % if we make ANY NEW LOWS
AMEX:XLU
by wavetimer
XLU: how the Fed's interest rate hike affected utility stocksThe stock market is currently experiencing the adverse consequences of the US Federal Reserve's decision to hike the interest rate, with the Public Services sector taking a particularly hard hit. Public services, being typically the last to be paid by citizens, compelled companies to rely on short-term loans during periods of low interest rates to cover cash shortfalls. However, the cost of servicing such loans has now significantly increased, leading to higher losses. Today, our focus shifts to the XLU ETF chart, which is invested in utility stocks. On the D1 timeframe, resistance has formed at 59.80, with support at 58.71, which was broken through yesterday. If quotes consolidate below this level, it is likely that the downward trend will continue. On the H1 timeframe, the short-term target for the price decline is around 53.77, with the possibility of further declines to 51.70 in the medium term. The likelihood of price growth appears to be extremely low. — Ideas and other content presented on this page should not be considered as guidance for trading or an investment advice. RoboMarkets bears no responsibility for trading results based on trading opinions described in these analytical reviews. The material presented and the information contained herein is for information purposes only and in no way should be considered as the provision of investment advice for the purposes of Investment Firms Law L. 87(I)/2017 of the Republic of Cyprus or any other form of personal advice or recommendation, which relates to certain types of transactions with certain types of financial instruments. Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.87% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
AMEX:XLU
by RoboMarkets
Symmetrical TriangleTop line slopes down and bottom line slopes up. Price broke down from the triangle and met target 1. Doji/indecision at support today. No recommendation. This seems to move down when Teck/market is in an upswing and vice versa. NextEra Energy Inc 14.83% Southern Co 8.12% Duke Energy Corp 7.75% Sempra Energy 4.85% Exelon Corp 4.38% American Electric Power Co Inc 4.37% Dominion Energy Inc 4.28% Constellation Energy Corp 3.80% Xcel Energy Inc 3.43% Consolidated Edison Inc 3.39% Total
AMEX:XLU
by lauralea
4
Crash Incoming finally?Stock Market Crash begins this week?? Looking at Utilities.... they are perched on the same trendline before they crashed in 2002 and 2008... Reason it could start tomorrow after hours.... 1. Crashes usually happen when your oversold... We are right now 2. Bonds are in position for a crash 3. DXY is ready to Rocket 4. Nvidia earnings after hours tomorrow..... the company that created this massive bear market rally... Nvidia is the AI king... And as the AI king they provided crazy guidance last earnings which created this massive bull market limited to tech.... No company has every had earning guidance for the next quarter with such a massive jump... Can they do it...sure.. they are selling AI chips for 30K a piece... The problem is supplies..... I'm not sure they were able to deliver the crazy outlook they promoted due to supply constraints plus I think AI mania is dying down.... Basically if they don't make earnings .... I believe that will be the catalyst for Nvidia stock to crash and start bringing the market down with it.... Even if they somehow make earnings if their guidance isn't shooting for the moon still that could kill the mania.... I thought the market would crash till AI saved it... So now I'm wondering if AI could be the catalyst that kills the market. It makes perfect sense... Most everyone is no longer short.... I see no reason for this market to keep going up from here.... it needs a catalyst to knock it down... All the analyst and most people think Nvidia will kill earnings... The market loves to catch people offsides...this would be the perfect moment. 5. JPowel Friday 6. Mercury goes into retrograde tomorrow 8-23-2023 (bad for technology)
AMEX:XLUShort
by TheUniverse618
1
Seeking Shelter from Recession in the Utilities SectorBoring is better in a recession. Fed Chair reaffirmed his steely resolve to fight inflation. In short, he wants to break the back of inflation "at any cost" to subdue it down to Fed’s target of 2%. Soft-landing is desired. But overcorrection to fend off sticky inflation could tip soft-landing into a hard one. In a recession, economic activities shrink resulting in declining outputs and softening demand across consumers and businesses. Recession leads to rising unemployment and reduced consumer confidence. History has ample evidence demonstrating that defensive sectors typically outperform the broad market index by more than 10% on average. This paper posits a long position in Utilities Select Sector SPDR ETF ("XLU") to harvest potential outperformance gains plus a dividend yield of 3.3% and combined with a short position in CME Micro S&P 500 Index Futures. INFLATION REMAINS HOT; FED RESOLVED TO FIGHT IT CAN LEAD TO RECESSION Last week, Federal Reserve Chair Jerome Powell reaffirmed his determination to tame inflation down to its target 2%. He reasserted his singular focus on restoring price stability in the US. If that requires higher interest rates for longer to get back to 2% target, then so be it. That was the key takeaway from Jackson Hole Central Bankers Symposium in Wyoming. US inflation is much cooler than a year before. History has taught policymakers an expensive lesson to avoid declaring victory too soon. Softening inflation combined with record low unemployment, strong business climate and resilient consumer balance sheets point to a potential soft-landing. However, over correction could tip into a hard landing. WHAT HAPPENS IN A RECESION? During a recession, non-cyclical sectors, like Consumer Staples, Utilities, and Health Care, have historically performed well. The fortunes of these sectors hinge on non-discretionary spending and hence less sensitive to economic fluctuations. These defensive sectors have outperformed the broad market by more than 10% on average during six of seven past recessions. Tech & Real Estate rank among the worst-performers. Dependant on discretionary expenditure, these sectors are the first to face the heat when businesses and consumers cut spending as incomes shrink. UNPACKING THE S&P SELECT SECTOR UTILITIES INDEX The Utilities Select Sector Index ("Utilities Index") is market-cap-weighted and tracks the performance of the largest thirty utility firms in the S&P 500. It aims to deliver exposure to firms from the electric & water utility, independent & renewable power producers, and gas utility industries. The Utilities Sector includes firms that provide essential services such as electricity, natural gas, and water. These firms marshal stable cash flows and low debt levels. Consequently, the sector is described as a defensive play which performs well during economic downturns. The Utilities Index was launched on 16th December 1998. Over the last decade, the index has delivered an average annual return of 5.5%. It exhibits lower risk with a volatility of 12.5%. It is popular among long term investors looking for a defensive investment vehicle. As of August 2023, the Utilities Index reveals an aggregate price-to-cash flow ratio of 10.1x, price-to-earnings of 19x, and one-year forward price-to-earnings ratio of 17x. Largest firm in the index weighs in with a market cap of USD 136.6 billion. The smallest firm has a market cap of USD 8.5 billion. Weighted average market cap of the index stands at USD 51.15 billion. Top ten constituents forming 59% of the Utilities Index as of 22nd August 2023 are: • NextEra Energy (14.85%) • Southern Company (8.03%) • Duke Energy (7.5%) • Sempra (4.88%) • American Electric Power (4.40%) • Dominion Energy (4.34%) • Exelon Corporation (4.32%) • Constellation Energy Corporation (3.75%) • Xcel Energy Inc. (3.47%) • Consolidated Edison Inc. (3.37%) Twelve-month price targets for the top-10 in the Utilities Index looks compellingly strong except for Constellation Energy and Consolidated Edison. Mean 12-month price targets are on average 14% above the closing price as of August 25th. Investors securing a long position in the index can expect to generate positive returns from capital gains in addition to a healthy dividend yield. RESILIENCE OF UTILITIES SECTOR IN A RECESSION Experts who have been calling recession have been stumped and humbled with the resilience demonstrated by corporations and consumers. A recession may be round the corner. Or we are living through a rolling recession and rolling recovery which impact one sector at a time. The chart below produced by State Street Research powerfully captures various sector performance across business cycles. If a recession is round the corner, then holding a long position in Utilities is an astute investor choice. COMPREHENDING UTILITIES SELECT SECTOR SPDR ETF ("XLU") XLU is a convenient low-cost option for investors to secure exposure to the U.S. utilities sector. It was launched in Dec 1998 and has a low expense ratio of 0.1% of AUM. XLU's AUM stands at USD 14.39 billion. Over the last six months, XLU has had a net inflow of USD 150.2 million. XLU has a 20-day volatility of 12% and a beta of 0.52x. It pays out an annual dividend of USD 2.10 amounting to an annual dividend yield of 3.31%. TRADE SET UP A sector's outperformance does not necessarily mean that it will appreciate during a recession. Since, equity prices generally decline during recessions, outperformance can also mean that the decline in defensive and non-cyclical sectors will be less severe than the decline in growth sectors. Investors can use a spread position to benefit from sectoral outperformance even when equity prices decline. This is because the losses from the long leg will be offset by profits from the short leg which is likely to perform worse. The proposed trade set up comprises of a long position in XLU and a short position in CME Micro E-Mini S&P 500 Index Futures expiring in December 2023 (MESZ2023). The XLU ETF settled at USD 63.63 per share on August 25th. Each lot of MESZ2023 provides a notional exposure of index value times USD 5. MESZ2023 settled at 4463 on August 25th delivering a notional value of USD 22,315. • Entry: 0.0142 • Target: 0.0160 • Stop Loss: 0.0135 • Profit at Target: USD 5,347 • Loss at Stop: USD 2,200 • Reward/Risk: 2.43x MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
AMEX:XLULong
by mintdotfinance
Does inter market analysis talking to us?The XLU/XLY Ratio (upper chart) is reaching a measured move target. Bottom chart is the SPX. Correlation between these charts are straight forward negative. You see it in the blue area indicator at the bottonm. Means when one goes up the other one goes down. The XLU/XLY ratio is in a downtrend and is going to hit a potential tunring point area. Are we coming closer to a turning point in the market? not a must... but a turn in the XLU/XLY ratio and an uptrend I would see as a confirmation for a downtrend if we see it.
AMEX:XLU
by Cashflowjaque