SPDR Select Sector Fund - Utili
Investment Thesis
XLU has been beaten down hard on a relative basis vs SPY — the XLU/SPY ratio RSI just hit 25.48, an extremely oversold reading that historically precedes at least a tactical period of utility outperformance. Absolute RSI is also nearing oversold at 35.45, while price remains above the 200-day MA — setting up a mean-reversion / defensive rotation trade.
Catalysts to Watch
XLU/SPY relative strength ratio dropped below both its 50-day (0.0683) and 200-day (0.0653) moving averages and its RSI collapsed to 25.48 — an extreme oversold reading on a relative basis. Simultaneously, XLU's absolute RSI fell to 35.45 and price slipped 1.4% below the 50-day MA, while holding above the 200-day MA at $43.72.
Why It May Work
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Timeline
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