UTIL Utilities Weekly Chart Negative Divegence Critical Levels Ahead

The rising wedge and negative divegence pointed out a couple weeks ago created the spank down. Oddly, however, the utes have held up well during this near term down move in the markets, and are the sole sector supporting the bull case currently. Therefore, the broad market down move is suspect, since the utes typically lead a down move. Perhaps a trip back up will occur to allow the utes to then lead a more substantial subsequent move down.

Two critical areas exist below for price. UTIL requires close monitoring as the days play out. The black line represents the upward sloping 50 week MA level at 424.5-425.0. The equities markets are in big trouble if this level fails. Perhaps today we see a test. UTIL is at 430.5 currently, only five points above this danger signal. The next level is the 411-417 zone. If this area fails, the broad markets will be in free fall. For next week, this 417 level will be the key level alone.

If UTIL does not lose the 50 week MA and it serves as support, that will provide equities markets the opportunity to come back up and readjust. Once UTIL loses the 50 week MA, that is a sign of major trouble in the markets. Weak markets will linger as long as price is under the 50 week MA. If the 411 level is lost today or Friday, or if the 417 level is lost next week, 11/28/11 thru 12/2/11, the broad markets will be falling dramatically with panic in the air. Thus, start your watch by focusing on price behavior in relation to the 50 week MA. If price does recover, and markets move back up over the coming days, it will provide an attractive short entry for the utilities again. 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.

Note Added 11/23/11 at 2:51 PM:  Posting this chart was timely since price came down to rupture the 50 week MA in today's session. This is a huge feather in the market bear's cap and indicates continued weakness in the indexes moving forward.