US Sector & Global Overview – 11/09

Most US sectors look oversold based on their individual trading ranges. We have suggested investors to go long utilities before based on a simple trading rule following bollinger bands. Utilities are currently trading well below its lower band and looks to be a good buy based on this indicator.

The recent sell-off in utilities is likely related to investors being spooked about the coming rise in the dividend income tax which would hurt holders of utility stocks in particular as these stocks mainly pay off investors through dividends (relative to capital appreciation gains).

Apart from utilities, information technology, consumer staples and telecoms also look attractive based on their individual trading ranges.

Globally, the Hang Seng looks overbought with US stock market looking most oversold with also the IBOV (Brazil) looking mildly oversold.