(See the video above for the full breakdown of Katie’s chart.) Magnitude has contracted in recent weeks, noting that the percentage of S&P 500 stocks above their 50-day moving average has fallen to levels not seen since the first quarter. These figures suggest that the sector is oversold and poised for a near-term recovery, benefiting interest-rate-sensitive sectors in particular, such as utilities, which have been hit hard by rising Treasury yields. From a bottom-up perspective, there are widespread signs of near-term downside exhaustion, according to DeMARK indicators for utility stocks. The sector’s deeply oversold situation increases the likelihood of a near-term rebound over the coming weeks. XLU YTD Mountain State Street Utilities Select Sector SPDR ETF (XLU), YTD Utilities are also oversold in relative terms, and a broad recovery could help them regain popularity in the near term. The PHLX Utility Sector’s ratio to the S&P 500 is at the bottom of its Bollinger Band, where we expect a period of relative stabilization. American Electric Power (AEP) is an example of an electric utility stock that is oversold near support. The weekly cloud pattern provides long-term support near $117, which is a natural place for buyers. Gas utility Atmos Energy (ATO) is also setting up well for a near-term rebound, testing key support at a Fibonacci retracement level near $157. Both stocks have over 6% upside potential from their 50-day moving averages for a compelling risk-reward ratio. (See the video above for Katie’s full chart breakdown.) —Katie Stockton with Will Tamplin Access Fairlead Strategies’ research for free here. 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