UTIL Utilities Weekly Chart

The utilities are a useful tool for gauging the intermediate and long term direction in the stock market. The 15-week look-back is key. 15 weeks ago price was way down at 550-ish so there is no chance for price to drop under that this week, therefore, utes will remain in a weekly uptrend and that forecasts further highs in the broad stock market. UTIL needs to move under the price level from 15 weeks ago to usher in broad stock market negativity.

Another level to watch is the 50-week MA down at 584. This is a very negative signal for the stock market should it fail. If the utes are already in a weekly downtrend and the 50-week MA fails, that is like a trap-door for the stock market with equities then falling like a stone. The bulls are in charge for now, however. The red lines show that UTIL is negatively diverged against all indicators over the one year time frame. In the shorter month or so range, however, the indicators are long and strong reflecting the parabolic momo.

The red lines hint that price will top out soon, say over the coming month. The green lines indicate that price wants to make new highs over the coming few weeks after any pull backs would occur.

Before the stock market places another major top it probably needs the utilities to cooperate. Therefore, if it takes say about one month for price to play around at these levels before it rolls over, then utes will likely be headed lower say in mid to late April and May. When utes roll over and the weekly uptrend turns into a downtrend, the stock market typically sells off in a big way between zero and a month or two later. Thus, if the chart above tops out say in April, a major stock market top may be on the come between mid-April and June.

Interestingly, the market topped out in October 2007 and it was about one year later in October 2008 when the crash began. Using this fractal relationship, stocks topped out last year in May 2015 so about one year later is the April-June time frame as when the potential negative window would open as described. For now, the higher utilities and UTIL in a weekly uptrend (based on 15 weeks prior) is a healthy bull sign for stocks and think of this in more of a weekly and intermediate term time frame. 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.