Hello Traders! Today, we will look at the Elliott Wave structure of SPDR Utilities Select Sector ($XLU) and explain why the stock is bound to end a cycle and bounce soon.
The Utilities Select Sector SPDR® Fund seeks to provide investment results that correspond generally to the price and yield performance of the Utilities Select Sector Index. It seeks to provide precise exposure to companies from the electric utility, water utility, multi-utility, independent power and renewable electricity producers, and gas utility industries.
$XLU Weekly Elliott Wave View Oct 02 2023:
The Weekly chart above shows the cycle from March 2020 low unfold in a 5 wave structure. The ETF made a new all time high in Sep 2022 which suggests a bullish sequence against March 2020 low. The rally peaked on Sep 2022 and started a pullback to correct the entire cycle.
The pullback has unfolded in a 3 swings corrective structure (ABC) entering our Blue Box area (55.81 – 44.73) where buyers are expected to appear soon. As long as price remains above the invalidation level at $44.73, $XLU is expected to rally soon. Remember, corrections run in 3, 7 or 11 swings, so risk management should be exercised. The market could bounce and end up doing 7 swings lower before higher. Therefore, we like to book partial profits and get risk free once the bounce takes place from the blue box.