SPDR Select Sector Fund - Utili
Investment Thesis
XLU is underperforming the broad market in relative terms and faces a risk-on headwind: a major breadth expansion signals capital rotating into cyclicals and growth, not defensive utilities. With the XLU/SPY ratio below both key moving averages and price stalling just 5% below its 52-week high on contracting volume, the risk/reward favors fading the bounce.
Catalysts to Watch
XLU/SPY relative strength ratio broke below both its 50-day (0.0607) and 200-day (0.0640) moving averages and has deteriorated -9.2% over the past year, while the broad market registered a breadth thrust with % of S&P 500 stocks above their 50-day MA surging from ~35% to 68.6% over the past three months.
Why It May Work
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Timeline
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