The Utilities Select Sector SPDR ETF (XLU) is currently trading above both its 50-day and 200-day simple moving averages, which is a sign of strength. On October 20, 2017, XLU was trading 1% and 5% above its 50-day and 200-day moving average levels, respectively. It might continue to show strength until it’s above both these levels.
XLU has recently entered the overbought zone with its RSI (relative strength index) currently standing at 71. Technical analysts believe RSI values above 70 are in the overbought zone, while values below 30 are considered to be trading in the oversold zone. Stocks might show a trend reversal when RSI is at extremes.
Top utility stocks
NextEra Energy (NEE) is currently trading at a strong premium of 3% and 11% to its 50-day and 200-day moving average levels, and its RSI stands at 84. Duke Energy (DUK) stock is currently trading at a 2% and 5% premium to 50-day and 200-day moving average levels. Its RSI is at 74.
Dominion Energy’s (D) RSI is near 79 and it is currently trading 2% and 4% above its 50-day and 200-day moving average levels, respectively. Southern Company (SO) is trading at a 6% premium to both its 50-day and 200-day moving averages. Its RSI is at 90.
All these four top utility stocks are trading in the overbought zones given their RSIs. These utilities form more than 32% of XLU. The heavy weights of these utility stocks might continue to weigh on XLU’s performance going forward.