UTIL Utilities Weekly Chart Now in a Weekly Downtrend Negative Broad Market Signal

The utilities sector is playing a key role in broad market direction right now.  Two months ago we saw the utes peak and roll over. Yesterday, price fell under the price from 15 weeks ago, which signals that the utilities have now fallen into a weekly downtrend. When the utes roll over and lead the broad markets lower, this forecasts serious market trouble ahead. The comparison number for this week (the close from 15 weeks ago) is 478.48. If UTIL stays under this number this week, the broad markets will remain weak. The bulls can only restart the upside rally if they move UTIL back above 478.48.

For next week, it only becomes more difficult. The comparison number is 483.05. So not only do the market bulls have to move UTIL back above 478.48 to regain control, but the bulls must also move price up towards 483 by Friday so UTIL can remain above 483 next week.  It all appears as a tall order but stranger things have happened. If during this week you see a large powerful up move in the utilities, the fix is in, the market bulls are coming back in to drive the SPX up thru 1500. If utes remain weak, the bears will rule moving forward.

Now that a weekly uptrend has occurred, which is a step one, now keep an eye on the 50-week MA at 462.21.  This level represents a trap-door in the markets. If UTIL loses 462.21, the broad indexes will flush, which would be quite dramatic indeed. On the TA (technical analysis) side, price fell under the bottom rail (thin black line) of the upward-sloping channel three weeks ago. Last week it back kissed that lower trend line and weakness begins again this week. The pattern off the top is a potential two-leg bear flag, or bear pennant, whatever you prefer (thin pink lines). The sideways consolidation move over the last three weeks is more of a triangle so we can call it a bear pennant. If 500 was the top and the first leg ended at 468-ish, that is about 30 handles to the downside. Thus, if the consolidation zone is now finished and price intends to move lower to fulfill the bear pennant, the target is 470-ish (where the second leg down starts from) minus 30, or 440-ish. And, as often happens, the lower target also forms a confluence with support levels, namely the key 440 horizontal support level. The negative divergence shown by the red lines, as usual, creates the spank down off the top.

The weak utilities over the last two months is very ominous for markets moving forward. Projection is a move to 440 support over the coming weeks. If 462 fails, Katy bar the door, the markets are heading for the falls if not already over. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.