The Rebirth of Boring?

Two months ago, I posted this on Twitter (with yawn included) regarding a breakout in the utilities sector.  As an equity investor, there are few things more frustrating than utilities looking good.  Example A is 2014, when utilities were the #1 sector for the year, outperforming the S&P by over 17%.

 Source: stockcharts.com

Source: stockcharts.com

Why is this frustrating?  Quite simply, the companies are boring.  Not sexy.  Not exciting.  Not creating crazy new products or providing amazing experiences.  Just giving us the basics.  Yawn.

One positive is a higher dividend yield.  The XLU currently pays around 3.3% vs. just under 2% for the SPY.  But that's about it.

So when I glance at the sector charts and see strong moves in Utilities and Telecom, I struggle to get excited.

Now the good news is that lots of other sectors are in better technical configurations.  Consumer Discretionary, Financials, Health Care, Technology, Industrials, and Real Estate are all above upward-sloping 50- and 200-day moving averages.

Also, regardless of short-term up moves, the two sectors have not provided any relative upside this year.  The S&P is up about 9.5% YTD, with the XLU up 8% and the IYZ down 9.5%.

 Source: stockcharts.com

Source: stockcharts.com

So what did catch my eye?  The XLU chart looks pretty strong, with the chart in a strong technical configuration of trading above upward-sloping 50- and 200-day moving averages.

 Source: stockcharts.com

Source: stockcharts.com

This is after the sector bounced off of the previous support range (blue shaded area).  For now, that's the area of downside risk.  Upside to previous highs around 54, and a break above that level would be a huge positive.

The telecom sector has had a similar recent bounce off of a support range, but the technical picture is much less rosy.

 Source: stockcharts.com

Source: stockcharts.com

The IYZ has literally gone nowhere in the last 12 months.  Plenty of volatility but directionally it's back at the same levels as a year ago.  Lots of resistance above including both moving averages around 32.15-32.30.

Also the two main stocks in the sector (T and VZ) both report earnings in the next week or so which always suggests "wait and see..."

RR#6,
Dave

Disclaimer: This blog is for educational purposes only, and should not be construed as financial advice.  Please see the Disclaimer page for full details.