Sunday, January 26, 2014

UTIIL Utilities Weekly Chart

Markets are in trouble and the stakes are high. The late day market collapse on Friday occurred because of the drop in utilities. There are two key numbers you always want to reference the 50-week MA and the closing price 15 weeks ago. These two numbers either confirm an ongoing broad market rally, or they don't. The weekly uptrend has turned into a weekly downtrend. If price falls below both of these two key levels, it is as if a trap-door is opened and sustainable weakness in equities would be expected moving forward.

The 50-week MA is 494.45 but since price is a few ticks under use the 494.50 level as the guide (the moving average will rise slightly as price rises). The 15-week look back number for the new week ahead is 496.05. Thus, the fate of the markets are determined by UTIL 494.50 and 496.05, and on Friday, price failed, and closed at 491.96. This is at the top rail of the sideways symmetrical triangle which holds epic ramifications for markets. If price breaks out higher from the triangle at 492, the target is 550-570. Wow. If price breaks out lower at 483, the target is 400-420. Equally wow. The RSI and money flow never reached oversold territory so after multiple years it is time to likely show the lower bounds some respect.

If utilities move higher, it will aid a market recovery rally. Watch UTIL closely at the opening bell. If price moves above 494.50, the market bulls are in business, the downside bleeding will stop, and a recovery rally begins. Bulls will pull a handkerchief from their pocket and dab the beads of sweat off the forehead knowing that the worst is over. If price stays under 494.50, equities will continue moving lower in earnest which will set up the 483-ish level for a bounce, or die decision, going forward. 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.

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