Utilities Select Sector (XLU)

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Excellent points Larry. I guess it all depends on a persons trading perspective. Are you trading short term only? I know you are. So trading with the trend which is up for the XLU and XLE would be a better bet than the SMH or XLK. The SMH is definitely in a downtrend. It has been showing signs of trying to turn it around but I don't think that will happen until all other sectors of the market have sold off some too.

The XLU and associated utilities have been in a strong. My only concern is that even utilities will get sold if the entire market sells off hard like it did yesterday. I think the XLU has a good chance of heading higher to form a long term double top where it will then sell off.

If we do head into a recession one of the first areas that will show leadership among stock groups will be technology and the SMH. Utility stocks may actually lag at that point but if you look at the charts they all get hurt in an actual recession:

Sector rotation shown with sector SPDR's on Long Term Monthly Charts - XLY (Consumer Discretionary comprised of Cyclicals/Transports) expected to move early in an economic recovery, XLK (Technology) expected to move early in an economic recovery, XLI (Industrials) expected to pick up next and carry on a little longer than the XLY or XLK spider, XLB (Basic Industry) next in line to do well rounding out the early phase of an economic recovery, XLE (Energy) expected to perform well as the recovery becomes well recognized, XLP (Staples) next to be expected to perform well as the recovery becomes well recognized, XLV (Services including Healthcare) As the economic recovery becomes even more mature money is expected to rotate into this area next until it becomes more obvious that the recovery has peaked, XLU (Utilities) As the recovery peaks stocks in general begin to under perform as rates rise and investors look for safe investments offering higher yields, XLF (Financials) As the recovery peaks stocks in general begin to under perform as rates rise and investors look for safe investments offering higher yields,