Just a few months ago, it was a no-brainer -- sell the utility sector.
After all, with Janet Yellen and the Fed primed to hike interest rates in 2017, high-yield stocks like utilities were primed for lower ground ahead. Sure enough, the Fed voted to raise its benchmark rate last month, the second such move in three months, and only the third rate hike since the financial crisis of 2008.
Only utilities haven't been in a tailspin. Wall Street got this trade very wrong.
In fact, the utility sector has been one of the hardest-charging corners of the market in 2017, the Utilities Select Sector SPDR ETF (XLU) up almost 8% since the start of the calendar year. There are some good reasons for that. For starters, there's the slow rate at which the Fed is projected to boost rates in 2017. No rate-hike surprises are on the horizon here.
Likewise, as more market participants worry that this rally is getting long in the tooth, the defensive posture of utility stocks plus the high likelihood that Yellen and company would hit the brakes on future 2017 hikes if markets drop hard, makes utilities an attractive place to be right now.
That's not likely to change. As I write, a handful of high-yield, major utility stocks are on the verge of breakout moves this spring. To figure out which ones to buy, we're turning to the charts for a technical look.
In case you're unfamiliar with technical analysis, here's the executive summary: technical analysis is a way for investors to quantify qualitative factors, such as investor psychology, based on a stock's price action and trends. Once the domain of cloistered trading teams on Wall Street, technicals can help top traders make consistently profitable trades and can aid fundamental investors in better planning their stock execution.
So, without further ado, here's a rundown of four technical setups that are showing solid trading potential right now.