Shifting Gears on Next Trade

I have possibly over-expressed my love for ETFs. It's what's given me a good understanding on how the market works, how the money moves, and an insight into a variety of stocks that I probably wouldn't have heard of otherwise.

Although my last option trade for XLE was enjoyable, I think it's time to go back to stocks for a little. I've been following XLE , XLI, and XLU (Energy, industrial, and utilities sectors respectively). Out of these three sectors, I traded XLI and XLE where XLE proved to be a successful trade for me since I followed my own rules and took profit. On the other hand, XLI was the complete opposite of it and I took the 25% loss. After reading, monitoring the news and learning about relative strength in comparison to SPY and holdings within XLU; I've decided to look at XLU holdings for my next trade.

Here's the thing, XLU is diverse in the way the holdings behave. For example, CEG is the most volatile and makes up 7.40% of the sector, while NEE is the least volatile but makes up 13% of XLU. I've gone through the different holdings and narrowed it down to Sempra (SRE) and Southern (SO). I've chosen these two as their volatility is not aggressive, but it isn't too passive either; it feels just right.

Let's look at SRE:

• Defined channel where support is $91.77 and resistance is $95.18
• RSI is currently at 51 - This is a pretty healthy RSI as it is neither near the overbought nor is it close to the oversold position. There's plenty of breathing room.
• SRE comparison against XLU proves that SRE is outperforming the entire sector by 9.44% - this is significant

Now that I've compared SRE against it entire sector and have determined that it is outperforming it, it is time to compare SRE against SPY to understand what is happening.

In the above, when comparing SRE against SPY performance, it is evident that SRE is slightly underperforming SPY by only -1.98% - This isn't a bad thing, on the contrary, it is a strong signal.

It seems to me that SRE tested the support on Friday for the most part and it is slowly recovering back. I like this holding out of the rest within XLU, it is not too volatile and it as great prospects when comparing it to both the sector and SPY. I am thinking of taking the following contract:

SRE call on April 17, 2026 $95 - this contract is currently at $2.65. This is a great potential, but there is also an ex dividend coming up on March 19, which will impact an open contract. I am thinking of entering this contract tomorrow after 10:30 am if I see it is in a good entry point. I will wait for the overnight trades to settle, this will help me define my stop loss from a calmer state after the morning trading volume.

If anything changes after the morning rush tomorrow, I might hold back and come back explaining the reasoning behind my decision, otherwise, I'll have a post entry summary.