UTIL Utilities Weekly Chart; Pay Attention to Utes While Charting the Path Forward

The utilities have been quiet for a couple months and more staggering sideways like the drunk in Times Square last evening. Every time a television talking head says data center, traders buy utility stocks trained like Pavlov's dog, until last week. Utes collapsed -4% last week and no one noticed. Utilities used to be called the widows and orphans stock since it was a Steady Eddie grower with a dividend and a perceived safety play in a downward moving stock market.

Now utes are tied to the AI boom and need for electric power and data centers that hum all night long creating sleepless nights for the neighbors. The AI and data center initial hype probably ran its course. Americans are already pushing back against higher electric bills as the wealthy class tried to slough off higher electricity costs, due to higher AI demand, on common folks. Communities are yelling NIMBY and BANANA at town hall meetings discussing approvals for data centers ('Not In My Back Yard' and 'Build Absolutely Nothing Anywhere Not Anytime').

So are the chickens coming home to roost? Chicken Train. Pass the bowl. The utilities are dropping faster than a prom dress at midnight. Keystone pointed out the top in the stock market in January and February due to the negative divergence in the charts and a multi-week downturn was set to begin, and it did. At that time, Keystone warned about the potential for the stock market to fall into a crash profile.

But utilities jumped higher during the February/March stock market selloff and Keystone took the crash off the table although a multi-week pullback remained on the table and it would be a significant drop, that it was with the SPX losing about -10% before recovering to the new all-time high at 7401.50 and new all-time closing high at 7398.93. The "SPX 7.4K" hats are passed out but there is a nasty stain on Keystone's and the stitching is already falling out. The tag says Made in China. He gave it to the Uber driver.

The stock market crash was off the table in February/March because utes were flying high. As per Norm Fosback's theory from decades ago, and modernized by Keystone, the utes will typically start down first, or move down in tandem with, the broad market, and this portends very bad things ahead and major negativity for equtities.

You want to watch the weekly closing price from 15 weeks ago, that establishes the weekly trend, and the 50-week MA at 1107 that typically serves as a trap-door for the stock market. It is remarkable that UTIL, or DJU, dropped to within 4 points of failure at 1107 on Friday and no one noticed. How could they since they were too busy buying stocks?

For next week, the week of 5/11/26, counting back 15 weeks, is the orange circle at 1091.27. Write that number on a sticky note and put it on your forehead for all five days next week. Stocks will be in trouble if UTIL loses the 1091.27 level next week. UTIL begins the week at 1112.

The set-up is not typical since the weekly trend would usually fail first, then the 50-week that opens the trap-door for the stock market but this time it is flip-flopped. If utes fail next week, the 50-week MA at 1107 will fail first and the 1091 level can be thought of as the trap-door for the broad stock market if it fails.

For the week of 5/18/26, the 1091 becomes meaningless replaced by the 1089.25 line in the sand (blue circle). For the week of 5/25/26, the shortened trading week with Monday the Memorial Day holiday and US markets closed, the 1089 will become meaningless and replaced with 1171.18 (brown circle).

Note how price stayed above the levels from last year and early this year creating the weekly uptrend in utilities and boost to the stock market. With price collapsing to 1112, we have a new ball game. It is baseball season now. Centerfield. Put me in coach. Roberto Clemente will always be Keystone's hero forever. He was a great man. Too bad young folks do not have excellent role models like that to follow anymore.

If UTIL loses 1107 next week, the stock market is in big trouble. If UTIL then loses 1091, stocks will likely be falling down the rabbit hole or will soon thereafter. Stock market bulls will be okay if they can keep the utility prices above the metrics listed. Price may be able to keep its head above the next 2 week's of 15-week lookback numbers (orange and blue circles), but starting the day after Memorial Day when stocks reopen for trading, the utes will likely slip into a weekly downtrend pattern forecasting bad things ahead for the stock market. Simply watch to see what unfolds.

Now you know how to gauge any negativity going forward. If utilities begin losing the key levels described above, the stock market is in major trouble and will go into a potential crash profile if the downside in stocks begins due to other catalysts. It is a cut and dry set-up so the die will be cast over the next 2 weeks one way or the other.

If both the 50-week MA at 1107 fails, and then the 1190-ish level over the next 2 weeks, stocks will be in major trouble going forward. It appears that it will be unavoidable but things happen like the wild orgy rally in stocks from April to the present. If you see utilities rallying next week and gaining back the losses from this past week, the fix is in and market makers plan on keeping stocks elevated for a while longer.

If utes remain sick and sink lower, be very afraid going forward. The Iran War and Strait of Hormuz mess will continue influencing stocks in the days ahead. Everyone waits for the latest dribble, er proclamations, from King Donnie Trumpski. It's more fun to spend the day with a Country Girl. Oh country girl, ya drive away the pain, oh country girl, ya make sunshine of the rain. 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.