Welcome to the Danger Zone

Loyal Readers:
Sorry to take so long to putting up another post, but I was busy enjoying some quality time with the homefolks back in the Adirondacks and discovering new delicacies like shrimp, stuffed with sausage and wrapped in bacon. Now it’s time to get back to business (and the diet) and lets start by picking up with where we left off with utilities. One thing that helps distinguish the Yinzer Analyst from other blogs; we go back and revisit past posts to see what we can learn. What did we get right and more importantly, where did we spectacularly fail?

Short Term Investors:
For those playing the short term trade I have only one thing to say:









Check out the updated chart from Stockcharts.com to start with. XLU has risen above the upper bound of the potential descending triangle and just poked its head over the 50 day simple moving average. Now it’s time to show if it has what it takes to move higher from here.

















Intermediate/Long Term Investors:
For those with an eye on more than a few days all I have to say is this…welcome to the Danger Zone! Buyers came back into the market following the dragon fly doji but as you would suspect, the volume has been distinctly weaker as the selling pressure abates so I’m taking a wait and see approach as we head towards a potential right shoulder.

















And for those more interested in playing hot sectors, XLU still has yet to break out of its downtrend pattern, in fact it’s more or less at the same level as it was when we last posted on it on August 11th as the S&P 500 has returned 2.61% while XLU has returned 2.36%.

















While it’s always tempting to play a hunch and take a chance on a bigger payout, until XLU shows that it has the momentum on its side, you’re buying beta and not alpha. And remember, if the broader market pulls back here xlu can gain momentum against spy by simply losing less. Always keep your eyes on the short and intermediate term trends.

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