UTIL Utilities Weekly Chart 50-Week MA

As highlighted many times, the utilities are a great ole time indicator of market direction. The weekly close is compared to the weekly close 15-weeks prior to determine if utes are in a weekly uptrend, or downtrend.  The wine was flowing like water this year with a weekly uptrend in place, which means the stock market is headed higher, until a couple months ago when the weekly trend turned into a downtrend. Typically, equities will top out from one to two months after the utes turn into a weekly downtrend. If utes lead the markets lower, rather than coincidentally, that hints at more serious weakness, and utes are definitely leading the broad market lower having topped in late April. Higher Treasury yields are pushing the utilities lower.

Once the utes are in a weekly downtrend, the second thing to happen is a failure of the 50-week MA now at 482.90, call it 483. This is typically the final nail in the market coffin. Markets would be expected to deteriorate rapidly if the 50-week MA fails, and it did on Friday. Keystone calls the UTIL 50-week MA the trap-door for markets. The SPX only fell 10 handles after the trap-door opened, a move of 20 to 50 handles would be expected. Perhaps since it was Friday afternoon moving into the weekend markets decided to wait until Monday to see if conditions improve, or not. Thus, if UTIL stays under 483, severe market weakness should develop and continue. If UTIL pops above 483, all bets are off for bears and the bulls will run markets higher today. If UTIL does recover, simply watch for when it drops through the 50-week MA again, since this will open the trap-door again. 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.