Some investors and investment managers always want to keep some money in the markets. Others are looking for a little yield in this low interest rate environment. Utilities of late are reflecting relative strength on an upside breakout.
Even if you feel you must be invested or income is very important, if support line (2) is taken out, turn the lights out on this position!
Great Utilities Chart, I’ve been holding and watching on PNF charts, nice to see confident selling point at (2) support. Although I feel that a contracting market will pull all boats down. this recent strength seems to indicate it will be a great addition to buy back once a bottom is found if the support is broken!
Thanks for all you do!
MLPs (Master Limited Partnerships) are also doing very well.
But one thing you have to remember is that there are a lot of funds and institutions that have to keep x amount in stocks, i.e., most equity mutual funds have to be 70% invested. So this isn’t necessarily a vote for utilities, but just the least bad choice for someone who has literally no choice but be in the market.
I think this is what that Hindenburg omen is measuring: the bunching up of those who have to stay invested into the safest part of the market, at a time when they might wish they ran a bond fund. You can see it happened in fall 2007, and in 2008, as well.
Utilities ultimately fell plenty….