AI
Monday, January 22, 2018 12:01:09 PM
Will Utility Stocks Ever Be A Buy Again?
Everyone trader in the world knows that utility stocks are very sensitive to higher interest rates. In other words, the higher the interest rate the worst the utility stocks will perform. Recently, interest rates on the 10-year U.S. Treasury Note has been increasing. Today, the yield on the 10-year note are trading at 2.63 percent and climbing. If you look at a chart of the Utilities Select Sector SPDR Fund (XLU:NYSE Arca) you will see that it has been declining as yields on the 10-year note has risen. This just shows us how inverse the utility sector is to higher bond yields.
Traders and investors should understand that bonds yields are not going to the moon anytime soon. The Federal Reserve is expected to raise rates just three times this year. The next rate hike by the central bank is expected in March, so this current move higher in interest rates is probably factored in already. This tells me that utilities could be a buy at some point this year. Traders and investors should watch the $45.00 level on the Utilities Select Sector SPDR Fund (NYSEArca:XLU). This level is where the XLU broke out in January 2016. Often, when key technical areas are retested they will serve as major chart support. This is the level where I will be looking to buy the XLU.
Nicholas Santiago
InTheMoneyStocks
Everyone trader in the world knows that utility stocks are very sensitive to higher interest rates. In other words, the higher the interest rate the worst the utility stocks will perform. Recently, interest rates on the 10-year U.S. Treasury Note has been increasing. Today, the yield on the 10-year note are trading at 2.63 percent and climbing. If you look at a chart of the Utilities Select Sector SPDR Fund (XLU:NYSE Arca) you will see that it has been declining as yields on the 10-year note has risen. This just shows us how inverse the utility sector is to higher bond yields.
Traders and investors should understand that bonds yields are not going to the moon anytime soon. The Federal Reserve is expected to raise rates just three times this year. The next rate hike by the central bank is expected in March, so this current move higher in interest rates is probably factored in already. This tells me that utilities could be a buy at some point this year. Traders and investors should watch the $45.00 level on the Utilities Select Sector SPDR Fund (NYSEArca:XLU). This level is where the XLU broke out in January 2016. Often, when key technical areas are retested they will serve as major chart support. This is the level where I will be looking to buy the XLU.
Nicholas Santiago
InTheMoneyStocks
