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Trade of the Day: Utilities Select Sector SPDR ETF (XLU)

John Jagerson and Wade Hansen

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Today, we’re opening a new bearish trade on Utilities Select Sector SPDR ETF (NYSEARCA:XLU).

Although investors weren’t showing a great deal of stress around rising rates last Friday, that is a trend we don’t expect to continue. Rising rates are bad for dividend-payers, and XLU is likely to be in the crosshairs if inflation/interest rate expectations shift (as we expect) this week.

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If the market falls in the short term, we don’t see XLU being able to defend against that trend either. The potential for some short-term profits in the face of a rising or falling market makes this an attractive entry.

‘Buy to open’ the XLU April 49 Put (XLU180420P00049000) for a maximum price of $1.10.

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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 SlingShot Trader, a trading service designed to help you make options profits by trading the news. Get in on the next SlingShot Trader trade and get 1 free month today by clicking here.

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