Don't Ignore This Chart!

Utilities Surge as 10-yr T-Yield Drops below 2.3%


The Utilities SPDR (XLU) surged as the S&P 500 fell below its 50-day SMA on Wednesday. Overall, notice that the 50-day EMA crossed the 200-day EMA in mid December and the ETF hit a 52-week high in late March. XLU is the strongest of the nine sectors since November 30th (+12.84%) and it is even up more than XLK (+11.61%). On the price chart, it looks like XLU is breaking out of a pennant formation. The March-April lows are used to set support in the 50-50.50 area. 

Chartists looking for a reason can point to the 10-yr T-Yield ($TNX), which dipped below 2.3% for the first time this year. The indicator window shows the Correlation Coefficient ($TNX, XLU) in negative territory since the early part of January. This means they move in opposite directions. Expect utilities to continue higher as long as the 10-yr yield moves lower. 

Thanks for tuning in and have a great day!
--Arthur Hill CMT

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Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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