Over the past week I have been keeping my eye on several key sectors and
stocks for potentially large end of year rallies to lock in more gains before
2013.
My recent calls have been RIMM
(up 54%), AAPL (up 5%), FB (up 8%) so it's been a great month thus far.
That being said there are three other plays that look amazing and one of them
is the utilities sector.
Looking back 30 years clearly utilities have a tendency to rally going
into year end. What makes this setup so exciting is that the Obama tax for
2013 has caused many investors to lock in capital gains along with dividend
gains so the utility sector has recently been beaten.
I always like to cheer for the underdogs because they can make large moves
quickly and this season its utility stocks.
30 Year Seasonality - Utilities Stocks
Chart courtesy of Dimitri Speck, www.seasonalcharts.com
Utility Sector ETFs:
In the graph below I show the main utility ETFs for trading. Simple
analysis clearly shows the selling momentum is slowing and where price should
go if it can breakout above the red dotted resistance line. Exchange traded
funds XLU, FXU, IDU, and DBU are the funds I found to be setting up.
Larger Image
Utilities Sector Trading Conclusion:
While I feel utilities are about start moving higher it is important to
mention that the broad market is setting up for a 1-3
day pullback. If the stock market does pullback this week then we should
see utilities pullback also. What I am looking for is a minor pullback in XLU
with price holding up above $34 while the stock market pulls back.
If you would like to get my simple yet profitable ETF & Stock Trading
Ideas then join my newsletter today: www.TheGoldAndOilGuy.com
