Utilities Select Sector SPDR Between the 50 and 200Day

Published on Tuesday, 07 February 2012 08:28 Written by TradersHuddle Wire

New York, February 7th (TradersHuddle.com) - Shares of Utilities Select Sector SPDR Fund (NYSE:XLU) closed the trading session at $34.68 near its 50 day and 200 day moving averages currently set at $34.91 and $33.86 respectively. Utilities Select Sector SPDR's price action is above the 200 day moving average but below its 50 day moving average, signaling a possible break out.

Utilities Select Sector SPDR Fund (NYSE:XLU) seeks to provide investment results that correspond to the price and yield performance of the Utilities Select Sector of the S&P 500 Index. The Index includes companies from industries, such as electric utilities, multi-utilities, independent power producers and energy traders, and gas utilities. The Fund utilizes a passive or indexing investment approach to attempt to approximate the investment performance of the Index.

Utilities Select Sector SPDR price action seems to be setting up for a tight range between the 200 day moving average as support and the 50 day moving average serving as resistance.

A tiered approach to enter the stock, appears to be the best way to maximize possible movements from the stock, as traders could enter Utilities Select Sector SPDR with a small position and wait for the stock to break out above the 50 day moving average at $34.91, where traders could add to their position as momentum builds with the breakout. The flip side will be if support being referenced at the 200 day moving average set at $33.86 breaks it could mean further downside in the horizon for Utilities Select Sector SPDR.