Utilities ETF Challenges All-Time High | ETF Trends

The largest exchange traded fund indexed to the U.S. utilities sector has rallied close to its record high, and some technical analysts think the ETF has more upside heading into the end of 2011.

Utilities Select Sector SPDR (NYSEArca: XLU) has risen 15.1% year to date, compared with a 1.9% gain for the broader market as measured by the S&P 500, according to Morningstar. [Dividends, Safety Drive 2011 Sector ETF Winners]

The utilities ETF is “hovering close to the all-time price high from late October at $35.46 a share” while momentum is “only at neutral so there is little to hold back a price breakout attempt,” said Tarquin Coe, an analyst at Investors Intelligence.

“The ETF is defensive and yields 3.88%. Longs are worth considering ahead of a reassertion of the rally off the August low, a move which would extend the sector’s outperformance,” he wrote in a newsletter.

The utilities ETF has trailed the market during the recent bounce in stocks. This may actually be a good sign for risk appetite because utilities are seen as a safe, dividend-paying sector. [Utilities ETFs Broadcast Improved Sentiment]