Taking Cover in Utilities

While the market has seen many components hit pretty hard in the last few sessions, there remains one sector that seems to have been able to weather the storm: Utilities ($XLU). As market participants leave "risk-on" sectors such as Technology ($XLK) and Consumer Discretionary ($XLY), we are seeing a flight to safety towards more defensive areas of the spectrum.

On a day when every other sector was in the red, and some substantially lower, Utilities were able to put in a gain of over 100 basis points:

In fact, a snapshot of today's "heat map" shows that Utilities were the lone bright spot:

Carter Worth appeared on 'Fast Money' this evening to give his thoughts on some potential "hide out" trades. After Utilities peaked last September, and have subsequently rallied with the broad market, he notes that they have yet to roll over, holding their ground at current levels.

Further, the top gainers in the S&P 500 were, for the most part, Utility names:

This sector continues to hover close to it's highs, a behavior that is quite different than it's peers:

On top of this, if you have been paying attention to the Daily RRG updates, sent out right here on The Chart Report, this rotation in Utilities has been evident for some time now:

According to Arthur Hill, a large portion of new highs among S&P 500 components last week came from this sector as well:

Why might this be the case? As David Larew explains, Utilities are one area of the market that are isolated from any "Trade War" talk:

Among the individual names, a few that look strong are Southern Co. ($SO), Xcel Energy ($XEL), American Electric Power ($AEP), American Water Works ($AWK), CMS Energy ($CMS), and Entergy ($ETR):

While this sector could eventually succumb to weakness as others have done over the last week, there is clear Relative Strength here for the time being. The signs have been there for some time, and we are now seeing that as Utilities begin to separate themselves from the broad market.