UTIL Utilities Weekly Chart

Utilities are useful as an intermediate forecasting tool. As mentioned many times before, the 50-week MA and the price from 15 weeks prior are two key numbers for forecasting markets. The 50-week MA is at 664.83 and price is at 656.08 so the market bears celebrate, however, this battle has been ongoing for six weeks and may continue. The 15-week lookback number is 655.00 (brown circle) and price teased underneath yesterday but recovered to 656.08. If UTIL fails under 655 at this morning's (Thursday) opening bell, stocks will likely flush lower. Market bulls must keep UTIL above 655 by all means necessary.

For all of next week, the look back number 15 weeks ago will be 662.00 (blue circle) which is easier for the bears to stay under. Watch UTIL into the closing bell on Friday to end the week to see if price ends below the 662, if so, the bears will be happy with further market weakness on tap next week.

The 20-week MA is at 653 and serves as downside support in contrast to the 50-week MA at 665 which is the critical overhead resistance. For today and tomorrow, Thursday and Friday, UTIL 665 and 655 are the key levels. If the bears can push under 655 today or tomorrow, the stock market should tumble lower and would be expected to be weak for the weeks ahead. Next week the 665-ish and 662 levels will be key.

The chart has a potential two-leg bear flag vibe (thin teal lines). The first leg down is from 720 to to 620-625, call it a 95 to 100-point drop, and then the sideways consolidation flag for the last three months with price moving sideways with a slight upward bias; the pattern is developing in textbook fashion so far. If price collapses from here and fulfills the two-leg bear flag pattern, the second leg would drop from the 665-ish to 565-570 over the coming weeks and this would portend very bad things for the broad stock market.

Watch utilities over the coming days to gather an idea for the intermediate term (weeks and months) ahead for the stock market. The bulls need to punch up through 665 as soon as possible and remain above there for the next couple weeks, if so, the bulls will continue winning going forward and the broad stock market will hang around the all-time highs for a couple-few more months.

If UTIL remains under 665, and drops under 655 today or tomorrow, or under 662 for all of next week, the stock market is in big trouble. If UTIL continues lower and loses the 20-week MA support at 653, the utes, and the broad stock market will begin falling apart in earnest. Traders will be yelling look out below. UTIL should tip its hand over the coming days or into next week.

Note that 3 and 4 weeks out the 15-week lookback comparison numbers become very easy for the bulls. Thus, if the bears want to push the stock market lower, they better get busy and start performing serious downside damage over the next couple weeks, otherwise, they will lose their window of opportunity. 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 Monday Morning, 2/6/17: UTIL finishes on Friday at 662 on the exact demarcation line between bulls and bears. UTIL 662 plays a key role to begin the new week. The 665 remains important as well.