UTIL Utilities Weekly Chart

The market bears were looking good when utilities topped out in June and rolled over to the downside. The old-timer's watch the utes since they either move down coincidentally or from zero to two months before the broader market turns down. So things were going good for bears into October but the bottom trend line holds sending price higher and slapping the bears in the face.

Two tools that are used for utilities to forecast the broader market direction are the 15-week lookback and the 50-week MA cross. The 50-week is at 538 so price is far above at 586 showing the bulls in full control of utilities and the broader equities market. Counting back 15 weeks is the purple circle in the 542-550 area so as long as price stays above this level the ongoing weekly uptrend continues for utilities creating happy equities. So price would need to drop under 550 over the next couple weeks to signal big trouble ahead for stocks.

Note that for the next couple months the 15-week lookback's are all in the 550-570 range as time moves along into the new year. Therefore, bulls are fine with UTIL above 570 but the first real problems for equities will surface if UTIL drops under 570 then big trouble under 550. So utilities are worth watching going forward. The indicators are negatively diverged for the last two years (red liens) but there is some near term momo remaining (green lines). Thus, price may sneak back up to the upper trend line as the month finishes or in early December but negative divergence would be expected to display in the near term after the final move higher occurs.

Price would then be expected to move sideways to sideways lower as the new year begins. If this occurs, it will be a bad omen for the stock market and signal perhaps a significant multi-year top for stocks occurring anytime now through February. Market bulls will remain happy without any worry if UTIL stays above 570 from now into the new year. 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.