Seasonal Strength Could Extend Utility Rally
In the weekly bar chart of the Utility Sector Index (UTY) above, seasonal strength (lower pane, shaded in yellow) typically begins following an early or mid-March bottom and usually lasts through early October although the bulk of the move is typically done sometime in May or early June (blue arrow).
Last year Utilities had a solid year, right up until mid- December. At that point broad market weakness finally dragged the sector lower. However unlike other sectors and indexes that violated key support levels in December, Utilities did not take out long-term support. The sector has since recovered and broken out to new highs. Declining interest rates and slowing growth concerns are likely fueling the strength the sector is currently enjoying and seasonal strength could soon add to the rally.
