XLU: Where Utility Stocks Might Go from Here

Moving averages

The Utilities Select Sector SPDR ETF (XLU), the representative of top utility stocks in the country, continued to rise. XLU is trading at $58.5, which is almost 4% and 7% above its 50-day and 200-day moving average levels, respectively. XLU crossed above its 200-day level in mid-January and has risen more than 10% since then. XLU’s 50-day moving average level close to ~$55.8 could act as a support in the short term.

XLU: Where Utility Stocks Might Go from Here

Exelon (EXC) stock is trading almost at its ten-year high. The stock is more than 4% and 11% above its 50-day and 200-day levels, respectively. NextEra Energy (NEE), the biggest utility by market cap, is trading near an all-time high. The stock is 5% and 10% above its 50-day and 200-day levels, respectively.

Relative strength index

The recent rally in utilities has pushed XLU into the overbought zone. XLU’s RSI was 69 at the closing last week. Utility stocks have been trading in the overbought zone for more than a month. NextEra Energy and Exelon are trading with their RSIs close to 75 levels.

Utilities (VPU) at large exhibited implied volatility levels around 12% last week—close to the 15-day average. The implied volatility represents investors’ nervousness. SPY had an implied volatility of 14% on March 22, which was higher than its 15-day average. NextEra Energy and Exelon had implied volatilities of ~14% last week.