The Utilities Select Sector SPDR ETF (XLU) is currently trading at $57.55, almost 6% above its 50-day and 7% above its 200-day moving average levels. The fair premium to both the moving average levels underlines the strength in XLU. Its 50-day moving average level close to $54.68 could act as a crucial support in the short term. XLU had crossed above ~$57.0 levels in December, which was followed by a severe sell-off soon after.
Relative strength index
Utilities (IDU) (VPU) have been trading largely in the overbought zone for more than a month or so now. XLU’s RSI was 82 at last week’s closing. RSI levels above 70 indicate that the stock is overbought, while levels below 30 indicate the stock is oversold. RSI at both these extremes suggests an imminent reversal in a stock’s direction.
PG&E (PCG), the California-based utility that filed for bankruptcy protection in January, continued to trade in the overbought zone recently. Its RSI was 73. Top utility stocks such as American Electric Power Company (AEP) and Southern Company (SO) are also overbought with RSIs close to 75.
The short interest in XLU declined 12% on February 15. On January 31, there were 47.7 million shorted shares in XLU, and the total shorted shares dropped to ~42.0 million on February 15.
A fall in XLU’s short interest might imply that fewer investors expect it to fall from the current price level. The short interest represents the number of shares that have been sold short and are not yet squared off. The metric generally indicates investor anxiety.