Alberta eyes investment in Japan’s refining to boost oil exports - Reuters
Global stocks were slumping on Thursday after China's Evergrande Group (HK:3333) failed to sell a 50.1% stake in its troubled property management division to an industry rival in order to raise cash to pay debts. That situation has already been worrying investors for weeks.
Plus, we're seeing the highest inflation in 13 years and analysts anticipate it will keep climbing.
At the same time, we've been noting a change in a sector rotation that hasn't been getting a lot of attention. Utilities, as illustrated by sector proxy the Utilities Select Sector SPDR® Fund (NYSE:XLU), have been consistently underperforming in just about every time frame—weekly, monthly, 3-months, 6-months and year-to-date.
Every timeframe that is except daily. Yesterday, not only did Utilities outperform, they jumped 1.6%, making them the leader among the 11 sectors on the S&P 500.
Could this be the start of a paradigm shift? Here's what it looks like on the daily chart.
The sector completed a small H&S bottom, with an implied target nearing $69.
While that appears bullish in the short term, the weekly chart tells a more complex story.
Via the broader view, it looks as if what could be the development of a weekly H&S top is in process. The uptrend, marked by the rising channel, is challenging seller resistance, those traders who remember the ETF's 38% plunge suffered in just about six weeks.
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads.
Therefore, expect volatility, which could be excellent for traders if they operate according to preset and coherent trading plans to which they are committed.
Trading Strategies
Conservative traders should wait for the long-term trend to decide on a direction before risking their capital.
Moderate traders would wait for the ETF to retest the neckline of the small H&S bottom.
Aggressive traders could enter a long position now, provided they accept the higher risk that goes along with the higher reward they expect by moving before everyone else. Money management is critical. Here's an example:
- Entry: $66.50
- Stop-Loss: $66.00
- Risk: $0.50
- Target: $68
- Reward: $1.50
- Risk:Reward Ratio: 1:3
Which stocks should you consider in your very next trade?
Successful investors know to check multiple angles before making their move. InvestingPro's three powerful features work together to give you that edge:
ProPicks AI runs 80+ stock-picking strategies, including Tech Titans, which doubled the S&P 500's performance in just 18 months!
Fair Value combines 17 proven valuation models to help you spot overpriced stocks and undervalued gems.
And WarrenAI delivers instant insights on any stock. Ask questions, get vetted answers backed by real-time data (unlike ChatGPT).
Our subscribers use all three to identify stocks before double-digit gains and avoid costly mistakes.
But with 50% during our Summer Sale, even if you only use one of these features the value pays for itself. Sale ends soon—don't wait until prices go back up.