UTIL Utilities Weekly Chart Negative Divergence

Utes spiking upwards to create a higher high but the indicators are all lagging with negative divergence, thus, the move up has no oomph and will be short-lived. The red circles show how price was moving up as the RSI and money flow printed higher highs as well, indicating that a higher high in price was needed. That higher high in price occurred for money flow four or five months ago so it was already content to see the chart roll over and head lower secularly.

The pesky RSI, however, matched the previous high with its July-August print, then the markets rolled over, but it did leave you guessing somewhat as to whether or not it satisfied the RSI's needs. With price now coming back up for a confirmed higher high it has satisfied the RSI so a more secular down move can begin again and continue along for the weeks and months ahead. This week, however, and the next two weeks, the utes have easy comparison numbers based on the 15-week look-back technique used by the old-time traders, so some buoyancy can exist over the next 10 or 15 trading days before she rolls over for a sustained down move.

The 423-427 level is key for the next 13 trading days, then this comparison number leaps higher to 439. So as long as the utes maintain 423-427, the overall markets are bull-friendly. If the utes drop under 423-424 this week, or 424-427 over the following two weeks, the broad markets are in big trouble again. If UTIL stays above these levels, the market bulls are fine. Then, for the week of 10/10/11, if UTIL falls under 439, then that spells big trouble for equities.  If these referenced levels fail over the coming days, that is step one telling you that weakness is ahead. Step two is if the utes lose their 50 week MA, this signals a trap door, and the equities markets will collapse.  The 50 week MA is at 417.27.

Thus the bulls are in fine shape currently, well above the intial danger of 423-427 for the coming days, and also way above armageddon at 417.  The projection, however, is for these levels to fail, taking the broad markets down, as the leaves continue to fall from the trees and the Autumn colors gain brilliance. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.