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Utilities are Gaining Momentum, Apple Remains Rangebound

David Becker
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Utilities are Gaining Momentum, Apple Remains Rangebound

The Utilities Sector SPDR (XLU) is leading the market over the last two days and the charts show that the XLU trading flat since April as it oscillated around the 42 level for several months. The ETF pulled back with the market in September as a falling wedge took shape. This is typical for a corrective pattern after a sharp advance.

XLU broke wedge resistance with a surge and could be poised to challenge the summer highs. The indicator window shows the SCTR with shading in the 40-60 area. A break above 60 shows relative strength and remains valid until a break below 40, which occurred in late July. XLU showed relative weakness in August, and then returned to relative strength as the SCTR broke above 60 again. The Equal-weight Utilities ETF (RYU) has a falling flag in September and an inverse head-and-shoulders working since July.

Apple (NASDAQ:AAPL) on the other hand, was hit by some negative news last week, but the stock ultimately held support and remained in its triangle consolidation. AAPL hit a new high in early September and then consolidated with a triangle the last five weeks. The RSI (relative strength index) which is a momentum oscillator that measures momentum along with overbought and oversold levels, is printing a reading of 51, which is in the middle of the neutral range. The stock held up pretty well considering the news and this triangle looks like a bullish continuation pattern. A breakout would signal a continuation higher and open the door to new highs.

Despite gapping higher on the open on Tuesday, momentum on AAPL is negative as the MACD (moving average convergence divergence) index is printing in negative territory with a downward sloping trajectory.

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