UTIL Utilities Weekly Chart

The stock market is at an interesting juncture. When the utes roll over from zero to 2 months ahead of the broad stock market, and trend lower, equities will fall like rocks. It will not be a run-of-the-mill pullback like the last decade where the dip-buyer's rush in because it is guaranteed that the Fed and other global central bankers will always print money to support markets and protect the wealthy elite class.

The action in utilities over the coming days and couple-three week period is uber importante. If the utes roll over from here, resuming the downtrend, it is over for the stock market. If utes rally from here heading back up towards the highs in September and October, the stock market bulls are fine and no matter what selloff is occurring in the broad stock market, equities will recover.

The two key parameters to watch with the utilities is the 15-week lookback number, which determines if utilities, and correspondingly the broad stock market, is in a weekly uptrend, or downtrend, and the 50-week MA currently at 801 and rising.

The candlestick on the right-hand side of the chart is in progress since today is Friday and the last day of the week to effect the candle. Counting back 15 weeks is the brown circle which is the weekly close of 831.22. This number only matters today. For next week, 12/2/19 through 12/6/19, the first week of December, counting backwards 15 weeks is the purple circle at the weekly close of 832.03. Thus, if UTIL fails at 832-ish over the next 6 trading days, the stock market is in big-time trouble. Note that the thick blue lines, that show strong price support levels, call out 830 as a key support level. So lump the two together and over the next 6 trading days, the UTIL 830-832 support level is uber important. If it fails, stocks will be falling apart in a serious way.

UTIL is at 853 so the stock market bulls are feeling pretty good about themselves. They have a full belly of turkey, mashed potatoes, pumpkin pike and Fed wine and feel great about the future. Every day is sunshine and rainbows in the US stock market and the month will not end in a November Rain, as Guns 'n Roses would sing (one of the top videos in rock 'n roll history noted for its cinematic imagery and Slash's epic and haunting guitar solo's).

The interesting week is 12/9/19 through 12/13/19. In those few short days ahead, for that week, the 15-week lookback number is at 845.52 (orange circle). Thus, stock market trouble starts in earnest if UTIL slips below 846 during the week of 12/9. With price currently at 853, that is only a few dollars lower. Obviously, if UTIL fails below 832-ish the week of 12/9, the stock market trouble is well underway and by the week of 12/16, stocks will be tumbling sharply lower. All the bulls have to do is keep UTIL above 832 for the next six days and then above 846 during the week of 12/9 and they will be singing and dancing into Christmas.

Tax loss selling typically hits its peak in early December so this may be a drag on the stock market in the coming days. New money typically comes in to start a new month so the first few days of December may have lift trying to offset the tax-loss selling negativity.

The thick blue lines show strong price support at the 818 palindrome and 806 levels. If the utilities are collapsing, the 818 and 806 levels will serve as temporary support on the way down. The very important 50-week MA is at 801 and rising. You can see that moving average perhaps coming up near that strong price support at 806 so that 801-806 support level would be for all the marbles. Think of it as a trap-door. If UTIL is dropping, stocks will be selling off in force, and if price comes down and fails at the 50-week, carnage begins. The trap-door will open and within a half hour or so of this failure will likely see the SPX down 30 handles, for starters. The stock market could potentially go into a crash once the UTIL 50-week MA fails.

Summing up, UTIL is at 853. If the 830-832 level fails before 12/6, the stock market is toast and equities will be tumbling lower in earnest. Stocks will remain buoyant if the 830-832 does not fail before 12/6.

If UTIL loses the 846 level during the week of 12/9, the stock market is toast and equities will be tumbling lower in earnest. If UTIL remains above 846, moving sideways or higher over the next couple weeks, the bears got nothing and the stock market bulls will be fine.

If UTIL is dropping like a rock and takes out the 818 palindrome support, the stock market is in serious trouble and may be headed for a crash. At this time, watch the UTIL 50-week MA like a hawk. If it fails, stocks will be taking out stops like they are not even there with prices dropping drastically. A crash or flash crash would be on the table. The table is set; what part of the menu would you like to dine on in the days ahead? You should be watching utilities every day forward into mid-December. It will tell you the fate of the US stock market in the intermediate and longer-term. 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.