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This morning, we’re recommending a bullish trade on Duke Energy Corporation (NYSE:DUK). DUK and the broader utility sector are looking more attractive to investors as we see volatility in the market increase.
Investors Turn to Utilities
Investors certainly seemed spooked last week, and although sentiment improved on Monday, yesterday’s market leaders were biased towards more conservative investments. A migration into safer sectors (such as utilities) is a common phenomenon when traders are nervous about growth prospects.
Daily Chart of Utilities Select Sector SPDR ETF (XLU) — Chart Source: TradingView
Looking at a daily chart for the Utilities Select Sector SPDR ETF (NYSARCA:XLU) we see that the sector has been rising since January. The stock managed to push past old resistance at just above the $57 level, which is a good sign. Because of the momentum in the utilities sector, selling puts on a utility is a good way to earn extra income this month.
We’ve traded on DUK before, and right now, we like the technical formation.
Turning to DUK’s daily chart, we see it has just completed a bullish “cup-and-handle” pattern. Historically, “cup-and-handle” patterns have a good track record for accurately signaling rising bullish momentum.
Daily Chart of Duke Energy Corporation (DUK) — Chart Source: TradingView
DUK is also a dividend payer, and the Fed’s dovish turn at the start of 2019 is another reason we think the stock will perform well. Because DUK’s momentum is aligned with trader sentiment, we want to keep our exposure to this position active. We recommend selling naked put writes on DUK.
To find out what DUK puts we’re selling — and to get access to our full portfolio of income-generating trades — consider signing up for risk-free trial subscription to Strategic Trader today.
InvestorPlace advisers John Jagerson and S. Wade Hansen, both Chartered Market Technician (CMT) designees, are co-founders of LearningMarkets.com, as well as the co-editors of Strategic Trader.
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