Playing defensive should not be confused with reducing your risk.
The Utility Sector is currently the strongest sector and has been for about two months. We saw a similar move back on February 2013 as investors were search for yield and piled into Utilities driving many utility stocks up 20%. However, from Peak to Trough from April to June the Sector fell 17%.
XLU is up 15% year to day. ChartLabPro.com moved to a Strong Buy on the Utility Sector on February 3rd and now the Sector is Approaching Overbought. At this juncture we are reducing exposure. We typically will reduce 100% at overbought. However, we have seen this story before and a 15% gain in a short period of time in this sector in our opinion is not justified. As a note, we do not look at RSI to determine overbought conditions or Standard Deviation.
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To learn more about ChartLabPro.com proprietary Buy/Sell ratings visit www.chartlabpro.com
