Volume patterns suggest astute investors are buying these two utilities stocks, both of which are good buys for yield- and safety-oriented buyers.
As I noted in January, the seasonal analysis indicated that the Select Sector SPDR - Utilities (XLU) “typically tops in late December and bottoms in March.” There were also technical signs at the end of 2011 that the best-performing sector in 2011 (up 14.8%) was forming a short-term top.
Even though XLU is down just under 3% in 2012, individual utilities like Dominion Resources (D), which is the ETF’s second-largest holding, is down 4.9%. Dominion pays an annual dividend of $2.11, and at the end of 2011, it was yielding 4.02%. Following the correction, it now yields 4.20%.
These two gas utilities saw large volume increases on Wednesday and closed strong. This suggests that once again, the big money is moving back into these utilities stocks to capture the attractive yields and capitalize on more defensive plays.
Chart Analysis: The weekly chart of the Select Sector SPDR - Utilities (XLU) shows the December high of $36.27 as well as the decline to a late-January low of $34.14.
See also: The 4 Key Seasonal Trends for 2012