Utility Sector Powers Up

Utility stocks are moving back on the offensive, as the Fed rate cuts have traders moving toward dividend-producing names. The entire sector is just starting to gain some traction to the upside.

Traders seem to be slow in moving back toward it, but we may see some increased momentum from the group as the prospect for further rate cuts and aggressive action from the Fed increases. Technically, the sector is in surprisingly strong shape, and the internals are confirming. We would look for a resumption of the uptrend from these levels.

Utility Sector HOLDRs

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The Dow Utility Index pulled back to the long-term uptrend line in mid-August. It then formed an orderly pullback channel, and the stock rallied off of the retest of the trend line and broke the pullback channel to the upside. This is bullish technical action, and it suggests that the group wants to resume the primary move higher. ...