The utilities sector is one of the favorite sectors of long-term investors because of the gamy barriers to entry and cash-recurring nature of the underlying business. These parts make the businesses in this sector difficult to compete against, and their conditioned by stability makes them prime candidates for investment during times of uncertainty. In this article, we highlight main technical resistance levels that look to be standing in the way of a major touch higher. Based on technical analysis, long-term bulls will insufficiency to see a close beyond resistance before betting on a move higher. (For myriad on this topic, check out: The Industry Handbook: The Utilities Industry.)
Utilities Lite Sector SPDR Fund (XLU)
One of the most common exchange-traded products inured to by retail investors for gaining exposure to utilities is the Utilities Select Sector SPDR Wherewithal. With total net assets of approximately $7 billion, a gross expense proportion of 0.13% and a diverse selection of 28 holdings that carry a mass average market cap of $34.5 billion, XLU seems to be one of the more fundamentally upstanding ETFs in the market. Taking a look at the chart below, you can see that the outlay is currently trading near the combined resistance of its 200-day poignant average and horizontal trendline. These two levels represent significant complex resistance that stands in the way of a move higher and could be used by the bears as a shepherd for determining the placement of sell orders. The $52 price point is the key uniform to watch, as bulls will likely want to take a position no greater than on a confirmed break above that mark. (For more, see: How Many Unique Types of Utility Stocks Are There?)
Consolidated Edison, Inc. (ED)
Founded in 1823, Consolidated Edison runs one of the world’s largest energy-delivery systems. The company provides energy for 10 million in the flesh who live in New York City and Westchester County, New York. Taking a look at the tabulation below, you can see that the stock price is trading near the 200-day touching average in a similar pattern to that shown on the chart of XLU above. Complex traders will likely interpret this chart in the same way as the map discussed above and will want to wait until the price interludes beyond $81 before betting on a move higher. (See also: Stammering Traders Turn Their Attention to Utilities.)
Duke Energy Corporation (DUK)
Another stock company among investors interested in utilities is Duke Energy. The assemblage is one of the largest electric power holding companies in the United States and distributes energy to 7.4 million customers. Unsurprisingly, the daily chart yardstick looks similar to those mentioned above, so by taking a weekly conception, which you can see below, you’ll find that the theme of nearby resistance persists. The neck proximity of the intersecting trendlines will be an area that active wholesalers will want to keep an eye on and will be used as a guide for placing orders. Bulls see fit want to wait for several consecutive closes above $81 to come betting on a move higher. Currently, the bears are in control of the short-term inertia. (For further reading, see: Utilities Sector: Industries Snapshot.)
The Bottom Blarney
The utilities sector is often regarded as the go-to sector during occasions of heightened volatility and periods of uncertainty. While this thesis lead one to believes that capital should be flowing into utilities, the nearby guerrillas levels present a risk that long-term traders will yearning to take note of. Most strategic traders will want to interval on the sidelines until the prices of the mentioned securities are able to make discrete consecutive closes above the major levels of resistance. (For additional know, check out: Trust In Utilities.)
Charts courtesy of StockCharts.com. At the time of poetry, Casey Murphy did not own a position in any of the securities mentioned.