When Competition Is Not The Best Thing:
With all the instability in February, with just 2 sessions left, it may be a good time to take a pause and reflect. January was a very strong month as the S&P 500 rose 6% (Nasdaq rose more than 10%), and this month so far the S&P 500 has given back roughly 250 handles. Looking at the major S&P sector leaderboard, the bottom 4 still consist of “defensive” groups with consumer staples, energy, healthcare, and utilities. The XLU is down 5.5% in 2023 thus far, the worst of 11. To end the week on Friday it was just one of 3 groups to advance on a very tough tape, and it recorded a bullish counterattack candle which also filled in a very small gap from the 11/9 session, which happened to be a gap up of almost 5% the next day taking out a bull flag. The ratio chart comparing the XLU to the S&P 500 below is sporting a bear flag, which is normally a continuation pattern in the existing trend, but if this can break ABOVE it could be a boon for the group. Utilities are also being held hostage to rising interest rates, as competition for their traditionally strong yields has company now.