“With the equity markets at record highs, this new activity now questions the honesty of the general market’s breakout. The ratio of the SPDR Utilities (XLU) versus the S&P 500 is attempting to turn up from a support band drawn across from the low of November 2012,” he wrote in a newsletter Friday.
“Momentum for the indicator is turning up from oversold, from a similar level as per mid-January of this year. That point was followed by three months of outperformance by the utilities,” said Coe, adding that XLU has a yield of 3.7%.
The chart below shows the relative performance of the utilities ETF versus the S&P 500.
