Naughty Flicks

Skip NavigationMarketsBusinessInvestingTechPolitics & PolicyVideoWatchlistInvesting ClubPROLivestreamMenu(See the video above for Katie’s complete chart breakdown.) Breadth has contracted over the past several weeks, noting the percentage of S & P 500 stocks above their 50-day moving averages has fallen to levels not seen since the first quarter. The reading suggests breadth is oversold and poised for a short-term recovery to the benefit of interest rate-sensitive sectors, in particular, such as utilities which have been hit hard by rising Treasury yields. From a bottom-up perspective, there are widespread signs of short-term downside exhaustion per the DeMARK Indicators for utility stocks. The deeply oversold condition of the sector increases the likelihood of a short-term relief rally over the coming weeks. XLU YTD mountain State Street Utilities Select Sector SPDR ETF (XLU), YTD Utilities are also oversold in relative terms, and a breadth recovery could help them rotate back into favor in the near term. The ratio of PHLX Utility Sector to the S & P 500 is at the bottom of its Bollinger Band, where we expect a period of relative stabilization. American Electric Power (AEP) is an example of an electric utility stock that is oversold near support. The weekly cloud model provides long-term support near $117, which is a natural place for buyers to step in. Gas utility Atmos Energy (ATO) also sets up well for a short-term rebound, testing key support from a Fibonacci retracement level near $157. Both stocks have over 6% upside to their 50-day moving averages for a compelling risk-reward. (See the video above for Katie’s complete chart breakdown.) —Katie Stockton with Will Tamplin Access research from Fairlead Strategies for free here . 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