We had very choppy markets last week and I don’t expect the seas to instantly calm this week. With that said, the major indexes seem to have pulled back to and bounced off of a lower trend line that I’ve illustrated here on the DJIA:

In addition, RSI has come back down to a more reasonable level overall (45.8 for the DJIA). These are both signals that I look for to indicate green markets but I do expect continued chop and volatility this week. This is a good week to be extra cautions.

The Trade for the week is Exelon Corp (EXC). Utilities generally have not suffered the same losses as much of the market has over the last few weeks. This is a less volatile trade than many of the trades that I’ve taken recently and this is by design. I would rather choose a slower moving stock and risk only making 2%-3% but gain the security that the stock will also be moving slower if it drops.

I will be initially putting in a lower bid at $43.50 to see if I get it. Around lunchtime, I’ll bid more aggressively to try to establish my position. I think it is a very good sign if we break through the previous high of $44.49 or the high before that of $44.85 earlier in the week because EXC is near levels where it has not been since 2011. If we break these highs, there aren’t any very established sticking points on the chart. I’m not worried, however, that it is overextended because the RSI is low and the stock has show fairly constant growth over this time.

Note that earnings for EXC will be announced on November 1st. I will not be holding this position at this time and I never recommend holding a stock through earnings.

XLU is the utilities ETF that I’m watching. It also is at a strong support level and I would like to see it break above $54.89.