Utilities are one of three sectors I believe will outperform in the fourth quarter. One could go long an exchange-traded fund or a mutual fund devoted to the sector, or we can zero-in on a few good names.
While many stocks on the New York Stock Exchange have yet to bottom or retest their August lows, Edison International (EIX), above, is one utility that has made a turn to the upside. EIX made a low in late June and rallied nicely in July and August. EIX declined in early September for its retest and made a higher low than seen in July -- a technical positive. Note also the rising On-Balance Volume (OBV) line and the positive Moving Average Convergence Divergence (MACD) oscillator.
National Grid (NGG), above, bottomed way back in March and has had several retests of the area, all of them holding successfully. Prices have rallied over their August high with the OBV line rising since July. All of this is positive along with the MACD oscillator.
PG&E (PCG) only just bottomed in early September and rallied while much of the market was weak (above). The OBV is improving and the MACD oscillator crossed above the zero line -- all bullish signs.
Now that you have three good looking utility charts it won't hurt to add the fundamentals. Find the best story to go with the chart. Put the odds in your favor.