UTIL Utilities Weekly Chart

Old-timers, and the new fancy algo's, follow two key metrics for utes as mentioned before. The closing price 15 weeks ago determines if utilities are in a weekly uptrend or a downtrend. The 50-week MA is also a key indicator. Back in 2014 you can see the utilities above the 50-week MA and each week printing higher highs as compared to 15 weeks ago. The wine was flowing like water as stocks rally.

The joy deteriorated this year as utilities peak and collapse. Once a weekly downtrend begins for utes the broad market is headed for trouble starting anytime over the following couple months. If the 50-week MA fails that is a trap-door that opens and stocks typically take a whoosh lower. 

Stocks quickly fell to begin the year in concert with utilities. In May, the utes lost the 50-week MA and was in a weekly downtrend which forecast trouble for stocks and sure enough, the stock market peaked-out in May. The action is choppy ever since. The utes fell down through the 50-week in August and the waterfall crash in stocks followed.

Last week, price fell below the price from 15 weeks ago which was the brown circle at 562. Price is already  under the 50-week so this is a double whammy warning signal for stocks going forward. For the new week ahead, 11/9/15, the 15 week look back number is 583 (blue circle) so the bulls have a lot of work ahead if they want to reinstate the weekly uptrend for utilities. In addition, note how the following three weeks (15 weeks ago) are also at higher levels (purple circles).

Thus, draw a line in the sand at 583 and higher, and one week from now that will be 588 (the 50-week) and higher, for the next month (all in effect during November). As long as UTIL stays under 583 over the next five trading days and then under 588 for the next three weeks after, the stock market is likely in trouble going forward. With the big drop last week, the forecast would be for the stock market to top out anytime over, say, the next 8 weeks. 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.