The utilities sector is often regarded as one of the most stable in the financial markets due to the high costs of entry and relatively predictable levels of recurring revenue. As more awareness is paid to essential services, the utilities that we rely on each day such as electricity, water, gas, and power definitely fall within this group.

In this article, we'll take a look at several charts from across the utilities sector and try to determine how long-term traders could consider positioning themselves over the weeks or months ahead.

Utilities Select Sector SPDR Fund (XLU)

Active traders who are interested in specific sectors such as utilities often turn to popular exchange-traded funds such as the Utilities Select Sector SPDR Fund (XLU) to get a sense of where prices could be headed. Taking a look at the long-term weekly chart below, you can see that the sector has been trending steadily higher since 2011.

This chart is of specific interest to followers of technical analysis because the long-term support of the 200-week moving average and the dotted trendline has propped up the price on each pullback. The sharp drop from record highs set in early January found support near these influential levels ($51.37), and they will most likely be used as guides for determining the placement of buy and stop orders over the weeks ahead.

Chart showing the share price performance of Utilities Select Sector SPDR Fund (XLU)
StockCharts.com

NextEra Energy, Inc. (NEE)

With a weighting of 15.09%, the top holding of the XLU ETF that could continue to capture the attention of active traders over the weeks ahead is NextEra Energy, Inc. (NEE). As you can see from the 10-year weekly chart below, the price has been trading along a significant ascending trendline and looks poised to continue the move until the price notches several closes below long-term support levels shown near $185 and $163.

Chart showing the share price performance of NextEra Energy, Inc. (NEE)
StockCharts.com

Dominion Energy, Inc. (D)

Another top holding of the XLU ETF that could appear on the watchlists of active traders over the weeks ahead is Dominion Energy, Inc. (D). Taking a look at the weekly chart below, you can see that the recent sell-off has sent the price of the company's shares toward the combined support of several influential trendlines.

Depending on risk tolerance and time horizon, this chart will most likely be used by trend traders to set positions for buy and stop orders. Short-term traders will most likely look to buy near current levels and anticipate the upward trend to regain its lost momentum. Medium- to long-term traders will also likely look to add near current levels, but their stop-loss orders will most likely have more room to account for heightened volatility. In these cases, stops will most likely be placed below $65 or $57, depending on risk tolerance and time horizon.

Chart showing the share price performance of Dominion Energy, Inc. (D)
StockCharts.com

The Bottom Line

The underlying need for services provided by the utilities sector is essential, and some followers of technical analysis could use the pullback toward long-term support levels as a buying opportunity. Stop-loss orders will most likely be set below identified long-term support levels, depending on risk tolerance and investment horizon.

 At the time of writing, Casey Murphy did not own a position in any of the assets mentioned.