I heard some interesting commentary this week from the pros about watching for signs in the cyclical:defensive sector ratio. I put together this chart using (XLK+XLI+XLB)/(XLP+XLU+XLV). It is a composite of tech, industrials and materials indexes as a ratio to staples, utils and health sector indexes. The chart ratio is about 1:1 right now. In a late stage...
Utilities are defensive and traditionally do well in summer, when risk stocks suffer from ‘Sell in May’. In the last six consolidations, which often start around May, the price moves up after the consolidation ends. Overall, the ETF has followed a clear parallel channel for four years now, and it is affected much less by macro events. Each consolidation has been...
This video shows a few simple and clear trade setups unfolding in the market for three very different sectors. Take a look, and if you like be sure to follow me here on TradingView!
This chart of the U.S. 10s/2s curve and the SPDR S&P Utilities Sector ETF (XLU) is interesting. A few days ago, I was reading a blurb by a well-known outlet about utilities getting "smoked" during the Q4 equity route. Like above, performance is relative to time frame. Additionally, you have to have a deeper understanding about what XLU is and what it can...
Relative performance of defensive sectors XLP, XLU and IYR vs SPY. XLV performance did not follow a cyclical pattern Best fit suggests outperformance of XLP vs SPY in coming months
The XLU (Utilities ETF) is a well-known defensive (succeeds in troubled economies, you have to buy their product) and has a very clear channel. My trade enters at the bottom of the channel and so allows for further market weakness. The price only matched the previous top last time, so I am playing safe with that top as a target, rather than going to the top of the channel.
XLU, the SPDR Utility Sector is well-known, high div paying defensive, and has not broken support like SPY as a whole. Let's play safe with a 1.6:1 trade, with stop below the lower tramline and target the confluence high of the bullish and moderate cases, as shown by the regular and dotted lines. Aggressive traders could set the stop at 53.75, reflecting the...
German Real Estate has been highly correlated with XLU and bonds while benefiting from flow of liquidity into equities. In previous slowdowns it has performed quite well. At least it has behaved quite predictably where buying the dips around KC and RSI o/s levels proved profitable.
I have been a huge component of growth slowing, and the cyclical/defensive proxy of XLI/XLU is a clear indicator that the growth outlook is mixed at best. Not only that, you might be a beta (probably the bad kind). When you see both growth and inflation slowing on a rate of change basis on the back drop of higher volatility, you must always look to long low beta,...
Utilities have started to outperform, meanwhile other sectors are underperforming. Just looking at history, you only have to go back to 2015-2016's industrial mini recession and EM recession to see how utilities outperformed other sectors. During this time, $XLU rose 25% while the S&P was flat, and technology / other cyclicals were all negative. Cyclical sectors...
Buying into the weakness here in XLU, with a synthetic covered call set up. -1 Nov16 $54 put for $1.87 cr.
New bullish credit spread on XLU . Opened and moved above the $53 mark this morning. Looking for a higher low and mid 52s to confirm as support early this week. Entry 53.05 Break even 53.21 Max profit 53.50 0.78:1 risk/reward
Well California approved a bill to raise utility bills for its citizens to protect PCG from bankruptcy due to all the lawsuits against them for being liable for 12 wildfires. Looks like it breaks this resistance look for it to fill more of that gap. But one thing with upcoming elections must be watch if any candidates gets in to try to change this legislation...
This video is the first of many, and I discuss the behaviors of the sectors and potential markets that are poised to trend in the near future. The "freshest" sectors quietly trying to start a new trend are the Industrial and Consumer Discretionary Sectors. The sectors (along with their industries) I think should be on every trend follower's radar are: XLF -...
In this video I analyze a live trade that I have been in for a few days now. I discuss how I was able to use price action to point out "red-flags" where it looked like price might turn against me. By acting on the price action I was able to get out just before a large drop and then get back in, almost where my trade originally started, but with a better cost...
A bullish pennant forming with a potential for a large breakout to the upside. See chart for pattern and price targets.
IV isn't extremely high, but has spiked up a bit in Utilities, so I'm looking at placing a strangle here. -1 Sept21 50/54 strangle for $1.14 cr. I will likely manage this position at 50% and we'll deal with specific loss mgmts when we get there.
With volatility at somewhat of an ebb here, I'm eyeing exchange-traded funds for directional plays in lieu of just hand sitting. The setup pictured here is of a XLU diagonal with the long dated option out in Dec, the front month in August. I would prefer setting this up as a skip month (Aug/Oct), but an Oct expiry isn't available yet. Here are the metrics:...