Tickers in this Article: SPY, DTE, NI, CMS, CNL
Even with the modest recovery in the S&P 500 since the May 18 low, the outlook remains uncertain for the short-term. The last outpost of support for this uptrend, which began in October, remains untouched at $129.42 in the S&P 500 SPDRS (ARCA:SPY). This signals that there is still hope for a further rally. If the markets decline, though, it will not take much for this support level to be broken. In this situation I look to stocks that are performing well and are part of a sector that traditionally has safe-haven status. Utility stocks that continued to perform well during recent market declines, and are continuing to push higher, present two advantages. They are strong so there is upside potential, but if the market declines, these stocks also may provide some insulation.

SEE: Support & Resistance Basics

DTE Energy (NYSE:DTE) continues to trade near its 52-week high at $57. Moving in a strong upward trend channel this electric utilities company is doing well during an uncertain time. So far, the stock been unable to break past $57. A break through resistance is likely to trigger a move to $58 - the top of the top of the current trend channel. Support is at $54.95 to $54.65 based off the recent retracements and the bottom of the trend channel respectively. If this support is broken, there are multiple levels of support below - $54.40, $53.59 and $52.43.

NiSource (NYSE:NI) is also moving within a channel higher. On May 1 2012 the stock had a surge, creating a 52-week high at $25.79. The stock currently trades below this, and has been finding resistance at $25.50 over the last few years. If the NiSource can climb above $25.50 the 52-week high is likely to be challenged. A move beyond that has a target of $26.50--the upper bound of the channel. Support is at $24.50 to $24.30 based on the recent pullback and trendline support. If the price moves below $24.30 it could signal weakness as the rising channel would be broken. Further support comes in at $23.50 to $23.25.

SEE: Interpreting Support And Resistance Zones

CMS Energy (NYSE:CMS) is trading at it's 52-week and seems undeterred by recent market declines. From January through to the middle of April 2012 CMS Energy was in a range. At the end of April it broke that range and has been moving aggressively to the upside. The sharp rally has put the stock very near the profit target for range breakout, indicating there may be a short-term pullback coming soon. I view pullbacks toward $22.50 as buying opportunities, with stops near $22. May 5 is the recent 52-week high at $23.33 and if the push continues, the price could target is $24.25 over the next couple of months. Support is at $22.25 to $22. A break below puts the stock back in the former range and takes away the bullish bias. Further range support is at $21.12.

Cleco Corporation (NYSE:CNL) is moving in a choppy fashion higher, seemingly unaffected by broader market events. On May 1 the stock put in a 52-week high at $41.29, a price level the stock has been trying to break since, and currently is very close. A move above the 52-week signals another advance, this time to $43. Support is at the recent retracement levels, $39.45. A drop below indicates a bit more selling may enter as the next major support level is not till $38.

SEE: Retracement Or Reversal: Know The Difference

The Bottom Line
The S&P 500 has risen off support, yet this market is not out of the woods yet. A small decline can now break that support level, which would likely trigger larger declines. These utility stocks provide some insulation if that occurs. Also, because these stocks are strong and trending higher, they also present upside potential. While these stocks are currently performing well, it is important to monitor risk and support levels as the trend could change.

Charts courtesy of stockcharts.com

At the time of writing, Cory Mitchell did not own shares in any of the companies mentioned in this article.

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