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A Potential Opportunity in Utilities

Jay Kaeppel
2026-03-24
As expected of a "defensive" sector, Utilities have not declined as much as most other sectors in recent weeks. But more importantly, are Utilities about to go on offense? Herein, we highlight two reasons to consider this sector for the months ahead.

Key Points:

  • Like most sectors, Utilities have shown weakness in recent weakness - but not as much as most other sectors
  • Despite this weakness, the combination of oversold conditions and a favorable seasonal period may provide an opportunity to play the long side in the months ahead
  • The State Street Utilities Select Sector SPDR ETF (XLU) allows traders to play the utility sector

Utilities have sold off… but not as much as most sectors

In the chart below, we see the price action for the State Street Utilities Select Sector SPDR ETF (XLU).

The bad news is that the sector has sold off in recent weeks. The good news is that it is still holding well above its 200-day moving average and is only slightly more than 6% off its February high. In other words, it is acting like the defensive sector it is purported to be. Is that a good enough reason to hold utilities? By itself, possibly not. But there are two other factors that might make utilities an interesting play in the months ahead.

XLU Bollinger Bands flashed a favorable signal

Our XLU % below BBand indicator shows the percentage of S&P 500 Utility Sector Index stocks that are currently below their re

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