XLU rises after consolidation periods
Utilities are defensive and traditionally do well in summer, when risk stocks suffer from ‘Sell in May’. In the last six consolidations, which often start around May, the price moves up after the consolidation ends.
Overall, the ETF has followed a clear parallel channel for four years now, and it is affected much less by macro events.
Each consolidation has been followed by a rise of around 6.7% so an entry at 58 (.30 below current), with a stop of 56.50 (below the consolidation low and the lower current channel (in red, I have treated Xmas 2018 as an outlier), and a target of 62.50 (where the upper channel will be on Oct 31, traditionally the end of the summer season neatly gives a 3:1 trade to run for six months.
Not the most exciting of trades, but safer than most.
Overall, the ETF has followed a clear parallel channel for four years now, and it is affected much less by macro events.
Each consolidation has been followed by a rise of around 6.7% so an entry at 58 (.30 below current), with a stop of 56.50 (below the consolidation low and the lower current channel (in red, I have treated Xmas 2018 as an outlier), and a target of 62.50 (where the upper channel will be on Oct 31, traditionally the end of the summer season neatly gives a 3:1 trade to run for six months.
Not the most exciting of trades, but safer than most.
David Atherton
