Sunday, December 21, 2014

UTIL Utilities Weekly Chart Overbot Rising Wedge Negative Divergence Developing

Fed Chair Yellen's stock market goosing last week has bullish traders and investors running into blue chip dividend stocks with both hands buying regardless of price. Comically, each trader thinks they are smarter than the other figuring that hiding out in utilities is a win-win providing safety during any broad market down turn at the same time providing a divvy. They are likely running into a buzzsaw and the safety and defensive position they desire only amounts to a fig leaf of coverage.

Utilities print another all-time record high last week and over the last year are up from 480 to 618, nearly +30%!! The indicators are setting up with negative divergence (red lines) but the MACD line and money flow want to see another high over the next couple weeks before the top is placed. When utes top out and roll over that is not a good sign for the broad market which will move down coincidentally or within a couple months time following the utilities lower. Utes should top out moving into and in January.

Keystone opened a position in SDP which is a double inverse shorting the utes but it is early. The position will be added to as time moves along. SDP is very thinly traded so you may want to explore shorting individual utility names instead. Simply assess the negative divergence on the charts to identify the most attractive set-ups. DUK and EXC are short candidates moving forward as the New Year begins. 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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