$5.2 billion regulated utility Pepco Holdings (POM) is the prototypical example of utility sector leadership in this market. While other names have been selling off for the past two sessions, POM was busy breaking out to new highs. But don't worry if you missed the move: Pepco has more upside ahead of it.
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That's because yesterday, Pepco broke out of a rounding bottom setup, triggering a high-probability buy signal in today's session. The rounding bottom is a price setup that indicates a gradual transition in control from sellers to buyers. The patterns name is a pretty good description of how it looks on a chart. Even though POM's rounding bottom came in at the top of its recent price range (not the bottom), the trading implications are just the same. The breakout through former resistance at $20.50 was our buy signal in Monday's session.