UTIL Utilities Weekly Chart Flips to a Weekly Downtrend Signals Trouble

Did Keystone mention the importance of the utilities this week?  Only in each of the last half dozen posts.  The chart graphically depicts the drama to unfold within a half hour as trading begins. The utilites sector has remained in an uptrend, week after week, for quite some time.  This action provides bullish support underneath the markets and allowed the broad indexes to float upwards in January.

Today, however, the world has changed.  Actually, the Friday 4 PM print was the tell.  As today's trading begins, UTIL starts at 449.  If UTIL remains under 453, the red line, the broad markets will remain weak moving forward. This print under the red line indicates that the utes have now fallen into a weekly downtrend pattern which in turn indicates that the broad markets are in trouble moving forward.

For any day this week, if UTIL pops above 453, the market bulls have regained control of the markets and a new bull party to the upside will begin.  If UTIL meanders sideways thru the 449-ish level, the broad markets will maintain a sideways posture with a bearish bias. If UTIL ventures lower, 448, 447, 446 and lower, the broad indexes will weaken substantially and the selling pressure will steadily increase.

Now for Part 2 of this dicey scenario.  If UTIL loses the blue line, representing the 50-week MA at 432-433, this represents a trap door for the broad markets and substantial and extended broad market downside will occur.  If the 50-week MA is lost, extra caution is required, since the markets will typically collapse from zero to within 30 minutes after the 50-week UTIL failure occurs.  This information is for educational and entertainment pruposes only. Do not invest based on anything you read or view here.  Consult your finanical advisor before making any investment decision.

Note Added 1/30/12 at 10:55 AM:  AEP is down about -1.6%, ED down -0.8%, and DUK down -0.6%, contributing to the UTIL weakness.