Friday, May 1, 2015

UTIL Utilities Weekly Chart 50-Week MA

The utilities are playing with fire approaching the critical 50-week MA at 581. Price drops to a 582 handle yesterday and closes at 587. The bulls realize the seriousness of the 50-week MA so they rallied utes hard yesterday to try and create more distance above and away from this "trap-door." The 50-week MA cross on the utilities have been followed in markets for decades. If utes are in a weekly uptrend and above the 50-week MA, stocks are in a bull market. The weekly uptrend is no longer the case; the utilities are in a weekly downtrend which is an omnous sign for stocks, however, the bulls are holding price above the 50-week MA.

If UTIL drops under the 581, stocks will likely go into free fall within about one-half hour's time after the rupture occurs. This scenario remains in play moving forward so continue to monitor the 50-week MA for the days and weeks ahead. S&P futures are running higher pre-market so the bulls will float the indexes higher to begin the day.

The weekly trend is determined by looking back 15 weeks and comparing the closes. The thick neon blue line at the peak is 15 weeks ago and that 650 comparison level is in play all next week. Then for the couple weeks after the 640 and 613-ish levels are key. Thus, with UTIL down in the 580's it is likely the utes will remain in a weekly downtrend for another two to three weeks at least. This is an advantage for the market bears but they must take advantage of the weakness and push UTIL under the 50-week MA to open the trap-door and begin significant broad market selling. Bulls are fine if they can keep price above the 50-week MA and then in a few weeks regain the weekly uptrend. UTIL is moving through the sideways blue channel and was rejected at the top rail so perhaps it will move to the lower blue rail again. The chart also displays a H&S pattern. 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 11:24 AM: UTIL is at 587 as Friday trading is underway.

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