Tag Archives: NYSEARCA:XLU

Have New Money To Invest? Which Sectors To Buy? Which To Avoid?

Year-to-date, the Utilities ETF (NYSEARCA:XLU) has appreciated 21% and the big two telecoms, AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ), have also appreciated more than 20%. Those are amazing returns especially including the above-average dividend yields utilities and telecoms typically offer.

However, with the bid up prices, it has become riskier to invest new money in utilities and telecoms.

The top five utilities in the XLU are all overvalued, including NextEra Energy Inc (NYSE:NEE), Duke Energy Corp (NYSE:DUK), Southern Co (NYSE:SO), Dominion Resources, Inc. (NYSE:D), and American Electric Power Company Inc (NYSE:AEP).

Reversion to the mean can happen for any of these utilities that are overvalued, and it could mean negative returns in the short term.
Read More

Consumer Staple and Utility Stocks are Near All Time Highs

The S&P 500 that represents the U.S. market is near an all-time high which might make stock investors nervous, especially when the market has been trading sideways. What should stock investors do? The short answer is to ignore the market and focus on individual companies. The long answer will come later in this article.

The S&P 500 has been trading in a sideways channel since August 2015. Right now, NYSEARCA:SPY is back at the top of the channel, and if it doesn’t break above the US$208 resistance persistently, it will head back down. If SPY falls past the US$185 support persistently, this will mark the top of the market for the time being.

SPY chart

SPY Weekly Chart

Investors have been piling on to the consumer staples and utilities as the select ETFs have been hitting new highs. See the Consumer Staples ETF (NYSEARCA:XLP) and Utilities ETF (NYSEARCA:XLU) charts below.

XLP chart

Consumer Staples ETF Weekly Chart

XLU chart

Utilities ETF Weekly Chart

Both the Consumer Staples ETF and Utilities ETF look like they’re losing steam as they hit or are near overbought territories. Read More