UTIL Utilities Weekly Chart Potential Bear Flag Expansion Pattern Tweezer Bottom

The utes are very important right now. For any major market pull back, the utilities sector needs to roll over first. This is why during the spring sell-off Keystone said the markets would come back up--the utes were not leading lower.  However, from July on a different story. The utilities rolled over and have been down ever since. Typically this leads to big trouble in the markets but the central bankers and global QE intervention has managed to hold the downside back and keep floating markets higher on free money.

If UTIL moves up thru the 50-week MA, a key level for this sector, and a key market tool, at 466.77, this will create a new leg higher for the broad indexes, SPX 1500+ will be on the way. The market bears need to prevent 466.77 today with all their might. It is only a game of pennies now. This 465-473 zone is important S/R so it is logical for price to retest. The move off the top shows a bear flag that played out to 450 and lower in November (red lines). Many times a bear flag will morph into a second larger bear flag so that is worth watching right now as shown by the blue lines, the first leg would be the drop from 500 to 440 and the consolidation is ongoing now perhaps a second leg down starting now? Typically the consolidation zones are not this steep, they should be a more gentle move higher as the initial downdraft is absorbed, so this hints that the bear flag pattern will not occur.

The green lines show an expansion pattern, or megaphone pattern, as price moves lower. UTIL poked above the trend line this week thus far and perhaps has its sights on the outer green trend line. If price moves up thru the green lines then the expansion pattern will become void. The blue circle shows a Tweezer Bottom, this pattern of two long candlestick shadows often marks a bottom, or a top if price was moving up.  The indicators show a long and strong profile wanting to see matching or higher price highs after a pull back may occur although the money flow is rolling over negatively diverged form price. The indicators are not providing a clear clue forward and almost exhibit a preference for a sideways vibe.

The small purple squares highlight the weekly closing numbers from weeks ago. A tried and true tool used by seasoned traders for decades is the 15-week lookback technique for utilities. The current weekly print is compared to the closing weekly print from 15 weeks ago. Simply count backwards 15 candlesticks.  This weeks comparison number is 475.48. If the bulls decide to continue the upside market orgy and push UTIL thru 466.77 today, that will send SPX to 1500. If UTIL then pushes thru 475.48 this week, the upside will become beyond euphoric with the SPX moving towards the 1520's.  The 15-week lookback comparison number for next week is 483.76 (early October highs) so the number is harder to attain next week to create bull fuel. Two weeks from now the comparison number drops back down to 475.49, then three weeks from now we will compare the 469.78, and then a month from now 448.11.  So it is easy to see that the market bears have a window of only a couple weeks or so to initiate strong market downside. Once the comparisons become easier in the weeks ahead, price should have an easier time to move above these levels from 15 weeks prior and this will create rocket fuel for the broad indexes. Of course, if the bears hold the 50-week MA today, or at the least hold the 475.48 thru the Friday close, they will remain in the game. To find the UTIL numbers from 15 weeks prior, so you can use this tool continuously into the future, use YHOO Finance, the DJU, click on Historical Data, then click for the weekly data and then simply count back fifteen weeks. In a nutshell the market bulls rule if the 15-week lookback says the utes are in an uptrend. The market bears rule if the utes are in a weekly downtrend, which is currently the case.

For today, UTIL 466.77 provides the market answer. Also 475.48 should the 466.77 give way to the upside. For next week the 50-week MA will remain important and the 483.76 will serve as the 15-week comparison number to determine if the utes stay in a weekly downtrend leading markets lower, or not.  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.