The ProShares Ultra Utilities $UPW confirmed a downtrend channel breakout on November 25, 2022, after forming a Marubozo candlestick (shown in red square on chart below). This suggests institutional investors are increasing allocations to the defensive Utilities sector ahead of the slowdown in EPS and revenue set to hit most sectors in 2023. $UPW stock is in a technical downtrend but a break above $78.27 resistance would cause us to upgrade the technical trend rating.
The index’s purpose is to track the stock performance of US utilities companies. Electric utilities, gas utilities, multi-utilities, and water utilities are a few examples of component companies. ProShare Advisors believes that the combination of the financial instruments the fund invests in should result in daily returns that are consistent with its investment objective.
The Utility sector is considered a defensive sector with companies that pay attractive dividends. This sector also offers stocks that are less volatile than those found in other sectors because these businesses frequently generate recurring revenue and pay that out in regular dividends.
Even though they had a record-breaking year, utility stocks fell lower in 2022 because of rising interest rates. Midway through October, after the market’s ecstatic response to the October CPI report, the battered utility sector reversed course and, on hopes of a Fed pivot because of falling inflation, resumed its upward rebound. The sector had dropped over 20 percent from mid-September to mid-October 2022.