Monday, April 8, 2013

UTIL Utilities Weekly Chart Fibonacci Retracements and Extension Negative Divergence Developing

Utilities have gone parabolic. Since November, the utes are climbing at a phenomenal pace of nearly one percent per week.  From 436 to 515 is an 18% gain in about four short months. The Fed's easy money, and now money fleeing Europe, as well as Japan's money, is rushing into dividend-paying stocks creating new asset bubbles as the utility chart above clearly illustrates.  The Fibonacci retracements for the drop from 500 down to 436 were blown through as price jumps higher in the upside orgy. The 38%, 50% and 62% Fib's folded like a cheap suit, then the 100% retracement which occurred at 500. A Fibonacci extension is 1.24% which calculates to 515 exactly where price sits now.

 The indicators are starting to set up with negative divergence (short red lines) but clearly there is momo on the bulls side (short green lines). Therefore, a pull back is needed, but price will likely come up for another high to allow the MACD line and money flow to join the negative divergence party, and then the path would be extended down. So utes will likely remain lofty in April with a roll over expected as April showers bring on May flowers. A short position can be developed in utes and scaled into now and through April. The central bankers are making a mess of markets. 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.

 Note Added 5:14 PM:  The market action is remarkable. The central banker intervention is pumping the new asset bubbles ever larger and UTIL closed at 518.25 with a 0.7% gain today. Utilities are now up over 19% in about 19 weeks time, moving higher at a ridiculous rate of 1% per week. These are not your grandfather's markets. 
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4 comments:

  1. ShaneApril 8, 2013 at 12:28 PM

    What are your thoughts on GOOG? I read one analyst that says the 750 is stronghold, but it looks like a train wreck to me. My bet is the 730 if not the 682.

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    1. Keystone SpeculatorApril 8, 2013 at 1:37 PM

      You must have missed the GOOG chart from 3/4/13 when the top was called, which occurred. GOOG did the same M Top type maneuver as AAPL and received its negative divergence spank down. Type 'GOOG' into the search box above and bring up the chart. So the answer is you needed to go short one month ago at 830. Keystone should have as well considering it was his call but he was not in it. GOOG drops from 830 to 770, over 7% gain for the short sellers, so that was the trade. Weekly chart is now weak and bleak so there will be pops that can probably be shorted but overall, probably best to move on to other plays. There is a gap big enough to drive Google's street van thru at 700-730 which may need explored. Over the next month probably a nice bounce coming from 740-760 once this zone prints.

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  2. AnonymousApril 8, 2013 at 12:32 PM

    JJC Dr copper strong today and up that's why we have the weak markets.

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    1. Keystone SpeculatorApril 8, 2013 at 1:43 PM

      In the context of using JJC for market direction, Anon, review the comment in the previous post. Copper and commodities broke down and are firmly in the bear camp, do not get hung up on one days move. That said, copper should mount a comeback, a dead cat bounce, JJC has fallen from 48 to almost 41, -15% in only 10 days, now that is a beating. If you want to use JJC as a gauge for the broad index direction, watch the 43.4-44.0 area; price is now at 42.09. JJC will cause market bearishness as long as it stays under that zone, the market bulls will have something to cheer if JJC moves up a buck fifty from here at 42.

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