During times of turmoil, the utilities sector usually holds up well, and this year has been no different. Year to date, the utilities sector as a whole is up 8.6%, while the S&P 500 index is down 4.42% as of the Friday close at 1,215.65. The SPDR Utilities Sector Select Index (NYSE:XLU) is up 10% to $34.64, from $31.49 year to date. Looking within the utilities sector, traders can find multiple stocks that are performing well, with many up more than 10% so far this year. There is even an handful that are up more than 20%; four of these stocks remain in strong uptrends, and while some are volatile, the stocks are likely to continue to outperform, even if the market move sideways or retreats further. Sector rotation strategies indicate that investors move into utility stocks in the early stages of recession, or when there is a threat of a recession. This is why utilities have been so strong recently and may continue to be, as long as there is fear about a decline or a flat-lining of the economy.

EQT Corporation (NYSE:EQT) is up 31.4% to $59.01 from $44.91 at the beginning of the year and remains in an uptrend. The 200-day moving average has provided the support and pullback may provide another opportunity for investors to get in. ETQ just crossed below the 50-day moving average so it may continue to slide down in the short-term, but if the trend can hold, buying the stock between $55 and $52.50 looks like a good entry point. A rise above $65.05 will break through short-term resistance and set in motion a likely retest of the high at $73.10.

Another stock that has been performing very well this year is Constellation Energy (NYSE:CEG). The stock is up 28.53% to $39.65 from $30.85 year to date. It is also trading well above the 200-day moving average and remains in a strong uptrend. CEG has pulled back very little and remains close to the 52-week high at $40.97. If the stock breaks above the 52-week high, there could be more room to run on the upside. The 50-day moving average has been providing some support, but if the price drops below it ($38.67) the trend line at $37 could be tested.

NiSource Inc (NYSE:NI) is also having a strong year to date, up 23.39% to $22 from $17.83. NI also remains very close to the 52-week high, and it has consolidated above the 50-day moving average. The consolidation pattern resembles a small triangle or pennant formation, and a rise above $22.40 would indicate an upside breakout of the pattern. If the breakout occurs, the 52-week at $23 will likely be tested and if momentum continues, look for the price to move towards $24 to $25.



CenterPoint Energy (NYSE:CNP) is up 22.53% to $19.36 from $15.80 year to date, and it remains in an uptrend. The stock recently moved below its 50-day average, but demand continues to be strong for the stock based on the continually rising on balance volume. Between $19.50 and $18.50 appears to be a good entry point if the uptrend continues. A drop below the 200-day moving average at $18.33 would signal that the stock is weakening. (For more, see Moving Averages: Introduction)

The Bottom Line
In times of fear, the utilities sector usually stacks up fairly well as investors move money to this more conservative and stable sector. Year to date, the sector as a whole has been outperforming the S&P 500, and is likely to continue to do so as long as fear about the economy is present. The stocks presented are all in strong uptrends and provide opportunity to potentially take part in the next advance as the uptrends continue. If a stock declines and breaks its respective 200-day moving average, it is a sign investors are moving out of the stock. Based on current performance, though, utilities remain the strongest sector and provide one of the best opportunities for relative risk protection and performance. (For more, see Technical Analysis Introduction.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

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

Related Articles
  1. Mutual Funds & ETFs

    ETF Analysis: iShares JPMorgan USD Emerg Markets Bond

    Learn about the iShares JPMorgan USD Emerging Markets Bond fund, which invests in bonds of sovereign and quasi-sovereign entities from emerging markets.
  2. Mutual Funds & ETFs

    ETF Analysis: SPDR Dow Jones International RelEst

    Learn how the SPDR Dow Jones International Real Estate exchange-traded fund (ETF) is managed and for whom the ETF is most appropriate.
  3. Active Trading Fundamentals

    How Hedge Funds Front-Run Index Funds to Profit

    Understand what front running is, and learn how hedge funds use this investing strategy to profit from the anticipated stock buys of index funds.
  4. Mutual Funds & ETFs

    ETF Analysis: Schwab US Large-Cap

    Discover how the Schwab U.S. Large-Cap exchange-traded fund is managed, the index it tracks and the investors for which it is most appropriate.
  5. Mutual Funds & ETFs

    ETN Analysis: Rogers Intl Commodity Energy Total Return

    Learn more about the Rogers International Commodity Total Return, which is an exchange-traded note that tracks a broad index of commodity futures.
  6. Technical Indicators

    Understanding Trend Analysis

    Trend analysis is the use of past performance to predict future price movement of a security.
  7. Mutual Funds & ETFs

    ETF Analysis: ProShares UltraPro Nasdaq Biotech

    Obtain information about an ETF offerings that provides leveraged exposure to the biotechnology industry, the ProShares UltraPro Nasdaq Biotech Fund.
  8. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Europe Financials

    Learn about the iShares MSCI Europe Financials fund, which invests in numerous European financial industries, such as banks, insurance and real estate.
  9. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Insurance

    Learn about the SPDR S&P Insurance exchange-traded fund, which follows the S&P Insurance Select Industry Index by investing in equities of U.S. insurers.
  10. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Emerging Markets Small Cap

    Learn about the SPDR S&P Emerging Markets Small Cap exchange-traded fund, which invests in small-cap firms traded at the emerging equity markets.
RELATED TERMS
  1. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  2. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
  3. Fintech

    Fintech is a portmanteau of financial technology that describes ...
  4. Indicator

    Indicators are statistics used to measure current conditions ...
  5. Intraday Momentum Index (IMI)

    A technical indicator that combines aspects of candlestick analysis ...
  6. Lion economies

    A nickname given to Africa's growing economies.
RELATED FAQS
  1. What assumptions are made when conducting a t-test?

    The common assumptions made when doing a t-test include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >>
  2. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  3. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  4. What is the difference between passive and active asset management?

    Asset management utilizes two main investment strategies that can be used to generate returns: active asset management and ... Read Full Answer >>
  5. How are double exponential moving averages applied in technical analysis?

    Double exponential moving averages (DEMAS) are commonly used in technical analysis like any other moving average indicator ... Read Full Answer >>
  6. Is there a situation in which wash trading is legal?

    Wash trading, the intentional practice of manipulating a stock's activity level to deceive other investors, is not a legal ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!