The S&P 500 Utilities sector is closing out 2014 with a bang. As shown below, the sector is currently in the midst of another big momentum move higher into extreme overbought territory -- currently trading more than two standard deviations above its 50-day moving average. The sector is up a whopping 28% year-to-date -- easily the top performing sector of 2014. No wonder so many portfolio managers are underperforming this year. Utilities -- the most defensive, low-growth sector of the market -- has been leading the way. It's tough to sell investors on a big overweight position in Utilities, especially in a rising rate (at least those are the expectations) environment. But if you haven't owned Utilities, chances are you've lost ground to the S&P this year.
After this recent move into the stratosphere, the P/E ratio for the Utilities sector has jumped up to 18.77. That's high, especially in relation to the P/E ratio of the S&P 500 as a whole. At 18.77, the P/E for Utilities is actually 0.27 points higher than the P/E for the S&P 500 (18.50).