Normally, utility stocks are a bastion of safety when times get markets get rough. But that doesn't look like it's the case with power company ITC Holdings ( ITC) right now. Instead, ITC is showing investors a bearish bias. Here's how to trade it.
ITC is currently forming a descending triangle pattern, a bearish setup that's formed by a downtrending resistance level above shares and horizontal support to the downside. Basically, as ITC bounces in between those two technically important price levels, it's getting squeezed closer and closer to a breakdown below support at $86. Don't let yesterday's relative strength in ITC fool you; sellers are clearly in control at higher levels.The sell signal comes on the breakdown below that $86 support level. That's the signal that this stock's unable to catch a bid at a price that's previously acted as a sort of floor for shares. If you decide to actually go short on the move through $86, I'd recommend keeping a protective stop right at the 50-day moving average.