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A reversal in Utilities' Relative Strength Index flashes a potential bearish signal

by Sentimentrader
2026-05-18
The Utilities sector (XLU) just suffered a rapid momentum breakdown, with its RSI crashing below 35. With relative breadth washed out and negative seasonality looming, XLU faces highly elevated near-term downside risk.

Key points

  • The Utilities sector (XLU) has suffered a rapid momentum breakdown, with its Relative Strength Index (RSI) crashing from overbought to below the critical 35 threshold.
  • Internal relative breadth has completely washed out, with 100% of XLU constituents registering a 42-day relative strength range rank of 20% or lower.
  • Historically, this specific momentum reversal-combined with severe fund outflows and looming negative seasonality in June-precedes a period of highly elevated downside risk and suppressed win rates.

A roundtrip for a widely followed price momentum indicator

In last week's research note, I discussed how traders can deploy relative strength as a standalone trading signal, a dedicated strategy, or a confirming layer within broader systems. The Relative Strength Index (RSI), a classic price momentum gauge, perfectly illustrates this flexibility.  

The Relative Strength Index (RSI), developed by J. Welles Wilder Jr., is a popular technical analysis indicator that measures market momentum. From a momentum inve

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