Have Investors Turned Off The Switch To The Utilities ETF?

off-switch“While the utilities sector joined the rest of the market in its rebound from the March 2009 lows, it would seem that someone flipped the group’s rally switch to the “off” position. Since peaking in mid-December 2009, the Select Sector Utilities SPDR (XLU) has fallen more than 8%, dipping below prior support at its 10-week and 20-week moving averages in the process. The ETF has now closed its third consecutive week below these formerly supportive trend lines. What’s more, the (XLU) has underperformed the struggling S&P 500 index (SPX) by about 4% during the previous 40 trading days,” Joseph Hargett Reports From Forbes.

Hargett continues to say, “One of the utilities stocks most vulnerable to a rollover in the sector is Allegheny Energy Inc. (AYE) (nyse: AYE). Compared to its peers in the (XLU), the stock stands out as an underperformer. During the past 52 weeks AYE has shed nearly 40% of its value, compared to the XLU’s modest gain of nearly 1% for the same time frame. The equity’s decline has its beginnings in late December 2007, and it seems that AYE has largely ignored the market’s recovery since the March bottom. In fact, the shares continue to trend lower under resistance at their 10-week and 20-week moving averages.”

The investment (XLU) seeks to replicate the performance, net of expenses, of the Utilities Select Sector Index. The fund invests at least 95% of assets in common stocks that comprise the index. The index includes companies from the electric utilities, multi-utilities, independent power producers, energy traders and gas utility industries. The fund is nondiversified.

TOP 10 HOLDINGS ( 55.53% OF TOTAL ASSETS)  
 
Company Symbol % Assets
AMER ELECTRIC POW CO (AEP) 4.53
DOMINION RES NEW (D) 6.31
DUKE ENERGY CP HL CO (DUK) 5.63
ENTERGY CP (ETR) 4.2
EXELON CORPORATION (EXC) 8.75
FIRSTENERGY CP (FE) 3.85
F P L GROUP INC (FPL) 5.93
PG&E CP (PCG) 4.52
PUB ENTRPR GP (PEG) 4.57
SOUTHERN CO (SO) 7.24

Chart for Utilities Select Sector SPDR (XLU)

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