UTIL Utilities Weekly Chart Market Sell Signal

The Wall Street old timer's use the utilities as a key indicator for broad market direction. Norman Fosback describes the methodology in the Stock Market Logic book from decades ago. Two key concepts are followed, the weekly uptrend based on the closing number 15 weeks prior, and, the 50-week MA. When the weekly trend turns negative the stock market is headed for trouble and when the 50-week MA fails a double-whammy of fate awaits. This double-whammy is in play now but markets continue to remain elevated. This is proof of the power of the central banker's Keynesian money printing schemes.

Count 15 weeks back to see if the utilities are in a weekly uptrend or downtrend. Last year into early this year the Fed wine is flowing like water as the weekly  uptrend remains in tact. The stock market sold off to begin the year but recover in February to present. The utes were in a weekly uptrend and above the 50-week MA which helped create the recovery. As the March winds begin, however, the utilities drop under the price level from 15 weeks prior creating a trend change (red circle); utes are now in a weekly downtrend. Usually, the stock market will peak and begin a substantial sell off within zero to a couple months time after the trend change occurs.

The weekly downtrend remains in place from March to present. This week the comparable week 15 weeks ago is the maroon circle. Next week the comparable week is the blue circle. In general, for the next seven weeks, the weekly closing price is above the 586-ish level. Thus, market bears will be happy if UTIL stays under 586 since their reward will eventually develop with stocks selling off. Bulls will recover and ruin the bear's negativity if UTIL moves above 585-ish. This level coincides with the 50-week MA so the 585-586 level takes on epic importance moving forward.

Note the price action from March through May in relation to the 50-week MA; do you think this moving average is important? Utilities lost the 50-week MA support in early June and remain under. The above chart is very bearish for stocks and it is surprising (well not so much since the central bankers have pumped markets higher for the last six years) that a significant selloff has not begun. As long as UTIL remains under 585 for the coming weeks, the expectation is for a large pull back in the broad stock market. 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.