UTIL Utilities Daily Chart; Death Cross

On the utilities daily chart, the 50-day MA stabs down through the 200-day MA for a death cross. The death cross portends trouble ahead for the utes which should filter into the broad stock indexes. Reference the UTIL weekly chart a few charts ago for further study in this important area.

As Keystone always mentions, when a death cross occurs, price typically bounces. It takes a lot of negative effort over many days and weeks to move price lower which will bring the 50-day MA lower to create a death cross so by the time it occurs, there is already an enormous amount of negative energy spent so price typically bounces. This is why death crosses get a bad rap. The death cross occurs but then price rallies so chart-hater's will proclaim that the voodoo science is wrong. They simply never spent the time to understand technical analysis and are not educated enough to speak on the subject.

So a bounce would be expected in the daily time frame. As long as the death cross remains in play, however, UTIL will be weak in the weeks and months ahead. The light green lines show that the indicators are positively-sloped but that is not possie d. The UTIL price has to make a lower low for a divergence to occur. Thus, if you are looking for a trade, playing utilities from the green circle will be a possibility. If price drops into that circle and the indicators remain positively-sloped, that will be positive divergence, which is upside fuel for price, in this daily time frame.

XLU is printing its death cross now lagging UTIL that printed the cross about four days ago. Weakness in utes is a negative signal for the overall stock market going forward. Monitor the death crosses on the utes going forward to see if they remain in place or if the bulls stage a comeback rally to try and turn things around. 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.