*Massive RSI Divergence
*** Looks like XLU might look to form a H&S, but based on how heavily the RSI has dropped, it might not even bother and just drop. In either case, Short the top of the Right Shoulder or a break of the neckline .... Let's talk about it! ***
Utilities always take a hit with rising interest rates. Here we are in a downtrend and a wedge triangle forms and cannot get past long-term support which has now become resistance. Targets at both at recent low for a quick two pints and then at next LT support and Fib extension at 48.58, for another ~ 2-3 points
XLU has formed a double top.
Utilities have been a flight to some degree of less risk. However Looking back to 2008 and 2000 utilities were hit just like most other equities.
I believe that utilities are going to be hit again within the next year.
* This information is not a recommendation to buy or sell. It is to be used for educational purposes only.
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...