Top Utility Stocks Continued to Trade in the ‘Overbought’ Zone

Moving averages

Utility stocks continue to look strong considering their simple moving average levels. The Utilities Select Sector SPDR ETF (XLU) is trading at $55.71, which is ~3% and 4% above its 50-day and 200-day moving average levels, respectively. The fair premium to both the support levels indicates strength in XLU. The levels close to $53.97 and $53.10 could act as a support for XLU in the short term.

Top Utility Stocks Continued to Trade in the ‘Overbought’ Zone

Relative strength index

Utilities at large continued to trade in the “overbought” zone last week. XLU’s RSI (relative strength index) was 72 at the close last week. Top utility stocks including NextEra Energy (NEE), Dominion Energy (D), and Exelon (EXC) are trading in the “overbought” zone with their RSIs at 74, 72, and 72, respectively. RSI levels above 70 or below 30 indicate an imminent reversal in the stock’s direction.

Short interest

The short interest in XLU decreased 12% on January 31. On January 15, there were 53.9 million shorted shares in XLU. The total shorted shares decreased to 47.7 million on January 31.

A decrease in XLU’s short interest might suggest that fewer investors expect it to fall from the current price level. The short interest represents the number of a company’s shares that have been sold short and not yet squared off.