Saturday, January 7, 2017

UTIL Utilities Weekly Chart; Battle at 50-Week MA

Keystone has posted this chart many times. Utilities are a key signal for the intermediate term for the stock market specifically the 50-week MA cross and the weekly closing number 15 weeks prior. The 15-week lookback determines if utes are in a weekly downtrend, or uptrend, and this signals broad stock market direction in the intermediate term (weeks and months ahead). The old-timer's follow the utilities. Norm Fosback originated the technique with the utilities decades ago. The book Stock Market Logic is still in print.

Look at how price respects the 50-week MA at 661.56 so much so that it closes at 661.56 unable to choose the direction ahead. There are numerous touches of the 50-week since last September. The battle continues. Market bulls will be victorious with Dow above 20,000 and SPX above 2,300 if utilities move higher and UTIL runs to 662, 663, 668, 670 and higher. Bears will growl very strongly going forward if UTIL collapses from 661 and under 643 would be lights out for the stock market.

For the week of 1/9/17, the closing print 15 weeks ago was 668.13 (purple circle). The bulls will be hugely victorious going forward if UTIL runs up through 668 this week. For the week of 1/16/17, Dr Martin Luther King Jr Day is 1/16, the UTIL 643.46 level is key (brown circle). On Friday the 13th into the closing bell, watch UTIL 643.46 since it will tell you a lot about the week of 1/16/17.

The chart indicators are not providing any guidance on the way forward. Price and the indicators are lining out sideways. Everything is waiting on the up or down decision. Price is dancing along the 50-week for the last month. Think of it like walking along a straight line. At first you are balanced and walk the line easily but then you begin to lose  balance and start flailing your arms wildly as you still walk the line but are about to fall off. That is what the utes are doing. UTIL will choose up or down in the week ahead and that outcome will likely point the direction for the stock market for weeks, perhaps, a few months, to come.

To boil all this windbag talk down into something simple and digestible, market bears need a failure from UTIL 661.56 beginning on Monday. This will drag the stock market lower. If utilities collapse lower with UTIL under 643, the stock market will likely be tumbling lower in earnest.

Market bulls need UTIL to bounce higher from 661.56. This will guarantee Dow 20K. If UTIL moves above 668, the bulls will be running super strong and the upside will accelerate. SPX will likely be attacking 2300. For Monday, 1/9/17, the most important number to watch in the stock market is UTIL 661.56 since it has ramifications for both the short (days and a few weeks) and intermediate (weeks and months) terms for the stock market. Which direction will it choose? Who will win and who will lose?  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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