May 9, 2024 4:56 p.m. | 2 minute read |
A 20-year professional trader reveals his “money line”
Ditch the indicator and use “MoneyLine”. Simple lines take the guesswork out of knowing when to buy or sell. This is the line on the chart that helped Nic Chahine earn his 83% of option purchases. Here's how he does it.
Utilities are rarely in the spotlight in market headlines, often overshadowed by the rapid growth of tech giants and the emergence of leaders in artificial intelligence.
Despite the lack of attention, the utility sectors represented by: Utilities Select Sector SPDR Fund (NYSE:XLU) quietly achieved its seventh straight green trade on Thursday, outperforming every other sector in the S&P 500 since the beginning of the year.
With a year-to-date performance of about 13.6%, utilities are a step ahead of energy. Energy Select Sector SPDR Fund (NYSE:XLE), which doubles the profits of the technology sector represented by. Technology Select Sector SPDR Fund (NYSE:XLK).
Chart: Utilities has outperformed S&P 500 sectors year-to-date.
The real rise for power companies appears to have started less than a month ago. Since April 17, the sector has been in the green for 15 out of 17 sessions, indicating a significant shift in investor sentiment.
Graph: Utility bills have risen 14% since mid-April
Power companies take back power, experts say
“Investors are starting to seriously embrace this space as a potential spin-off to the AI boom.” Adam TurnquistLPL Financial's chief technical strategist wrote in a memo.
According to the International Energy Agency (IEA), global electricity demand from data centers could soar from 460 TWh in 2022 to 650 to 1,000 terawatt hours (TWh) by 2026.
Experts emphasized that the surge in power demand among data centers could be a major tailwind for the utility sector.
Also read: AI data centers drive electricity demand: Goldman Sachs picks 16 stocks driving the trend
Data centers have also dominated recent earnings announcements. for example, Dominion Energy Co., Ltd. (NYSE:D) powers Northern Virginia, home to the world's largest data center market, with approximately 70% of the world's Internet traffic passing through it.
In its May 2 earnings call, Dominion highlighted a significant increase in data center demand, noting changes in the size and speed of requests.
Turning to the technical side, Turnquist notes that the S&P 500 Utilities sector to S&P 500 ratio chart, which tracks trend direction and strength, has recently reversed its own downward trend, dropping below 200 for the first time in more than a year. He emphasized that it exceeded the daily moving average. This suggests that the utility sector may further outperform.
Graph: Relative performance of utilities against S&P 500 surge above 200-day average
Read now: Investors flock to low-cost Vanguard S&P 500 ETF: Is it time to switch from SPY to VOO?
Photo via Shutterstock.
A 20-year professional trader reveals his “money line”
Ditch the indicator and use “MoneyLine”. Simple lines take the guesswork out of knowing when to buy or sell. This is the line on the chart that helped Nic Chahine earn his 83% of option purchases. Here's how he does it.
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