The Energy Sector SPDR (XLE) rose by 1.4% last Friday, fueled by worries about inflation and a move towards safer investments. The price is approaching a $90 resistance level, but it is held back by the 200-day moving average at $87 and a relative strength index (RSI) of 58. XLE has traded between $74 and $98 over the past year. The near-term ceiling at $90 indicates a potential pullback to the $86-$87 support range. The Consumer Staples Sector SPDR (XLP) increased by 1.5%, bouncing off a recent 52-week low of $75. However, the RSI shows some bearish pressure could slow this upward trend. The short-term target for XLP is $78, which is just below strong resistance at $80.50. This limited volatility might make defined-risk call spreads a good strategy for steady income.

The Utilities Sector

The Utilities Sector SPDR (XLU) also saw a 1.4% rise as investors shifted towards stable sectors. XLU aims for an initial resistance level of $90, with the potential to challenge previous highs of $93. The $88-$89 range is seen as an ideal entry point for long positions, suggesting opportunities for gains through options. The Global X Uranium ETF (URA) dropped 14% last week, hitting the $45 support level. This decline seems more like a broader sell-off than a simple correction. If support holds, a recovery target of $51 is possible, making defined-risk strategies like December call spreads attractive. The iShares Ethereum Trust (ETHA) fell by 11% due to a reduction in risk around digital assets. The $25 level may offer an entry point if conditions stabilize. Short-term targets are set at $33, and defined-risk options like December call spreads are recommended to handle volatility.

The Energy Sector

The energy sector is currently facing significant resistance between $87 and $90. Recent data from the U.S. Energy Information Administration indicates that crude oil inventories are stable, making a breakout above this level unlikely in the coming weeks. Given this strong ceiling, a pullback to the $86 to $87 support range is expected. A breakout above $90 is needed before considering new long positions. Looking at similar situations from 2024, these resistance levels often hold for weeks before a new trend forms. This scenario is perfect for a defined-risk strategy to benefit from a potential pullback. A bear call spread, which involves selling a call option with a strike price above $90, could effectively generate income. This strategy works if the price remains steady or trends lower towards its long-term support. In consumer staples, the bounce from the $75 floor signals that major buyers are entering at this level. Nonetheless, the recent October 2025 Consumer Price Index report shows food price inflation has eased to just over 2% annually. This reduced pricing pressure suggests the rally may lack momentum. We expect the rebound to lose steam around the $78 resistance level over the next few weeks. A significant move towards the previous high of $80.50 appears unlikely without new drivers. Thus, we should see this as a short-term bounce within a broader range. This market structure is suited for collecting premium through credit strategies. We could implement a risk-defined call spread by selling call options with strike prices between $78 and $80. This allows us to benefit as the sector remains range-bound and the bounce loses strength. The utilities sector is showcasing a promising setup for continued upward movement. Its recent strength is supported by hints from the Federal Reserve that interest rate hikes may be ending, which has historically benefitted utilities. During the 2023 rate pause, capital often moved into this defensive sector in anticipation of stable monetary policy. Our strategy is to establish a long position on any dips to the $88 to $89 range. This creates a strong potential for a move targeting the $90 psychological level and the prior all-time high near $93. The technical structure of the sector backs this upward trend. With low implied volatility, buying long-dated call options is an appealing strategy. We should consider purchasing December calls with a strike price of $90 or $91. This method is cost-effective for leveraging a move to new highs, offering a potential reward that exceeds the initial risk. The uranium ETF saw a significant sell-off, but Friday’s bounce from the $45 support level suggests that the selling pressure may be waning. This sharp decline was likely due to profit-taking rather than a fundamental shift in the long-term outlook for nuclear energy. Reports from early November 2025 confirmed government funding for new-generation nuclear projects, reinforcing the sector’s strength. We need to see the price hold above the $45 support level through the middle of this week. If it does, it will confirm a tactical entry point for a counter-trend rally, with the initial upside target set at the $51 resistance level. Given the sector’s high volatility, a defined-risk options approach is the most prudent. Once stability at $45 is confirmed, we should look to initiate a long call spread, such as the December $48/$53 spread. This strategy enables participation in the expected rebound while clearly defining our maximum risk. In the digital asset space, the Ethereum trust’s 11% weekly decline reflects a broad trend of reducing risk. Recent data showed net outflows exceeding $150 million from crypto investment funds, indicating that institutional players are pulling back. The long-term bullish outlook for Ethereum now hinges on the vital support at its 200-day moving average near $23. For the next week, we are focused on monitoring the $25 level for stability. If this level remains firm following the weekend’s trading, it may present a high-probability entry for a short-term recovery trade. However, we expect strong resistance around $28.55. If price confirms support at $25, we can initiate a trade aiming for a recovery target of $33. To manage the risks and time decay, a defined-risk structure is necessary. Buying a December $26/$33 call spread would be a good strategy to take advantage of a potential bounce. Create your live VT Markets account and start trading now.

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