Utilities: A Port in the Storm
The utilities were the outperforming sector in today’s decidedly dismal market. The Utilities Select Sector SPDR (XLU) was up 1.2% and formed what could be a morning star reversal pattern on its daily chart. This three day pattern consists of a large dark candle, followed by a small opening and closing range “doji” candle, and completed by a large white candle. It represents a transition from bearishness to bullishness, and is often seen at important bottoms. The relative strength index is attempting to cross above its centerline reflecting positive price momentum and the daily MacD which is overlaid on a weekly histogram, is attempting to move above its centerline on both timeframes. Chaikin money flow has been improving since the end of June and today is above its centerline, indicating greater buying than selling pressure. Today’s close was just below the 50 day moving average and follow-through strength would be another technical positive and confirm the morningstar pattern.