A relief rally could be coming soon for these stocks getting hurt by higher rates, says Katie Stockton
The deeply oversold condition of the utilities sector increases the likelihood of a short-term relief rally over the coming weeks, says Stockton.
TL;DR
- Market breadth has contracted, with S&P 500 stocks above their 50-day moving averages at multi-quarter lows.
- This oversold condition suggests a potential short-term recovery, benefiting interest rate-sensitive sectors.
- The utilities sector, particularly represented by the XLU ETF, is deeply oversold and poised for a relief rally.
- Technical indicators for individual utility stocks like AEP and ATO show oversold conditions near support levels.
- Both AEP and ATO have over 6% upside potential to their 50-day moving averages, presenting a favorable risk-reward.