UTIL Utilities Weekly Chart; Bulls and Bears Battling for Market Control into Year-End; Sideways Channel; 50-Week MA Line in Sand

Here is a look at the bull-bear battle going on in the utilities sector currently. Most sectors drank the Fed Kool-aid, that is spiked with powerful shots of easy money, starting late March and have recovered big-time. Tech and chip stocks lead the parade higher. Banks are puffing their chests out over the last few days. Utes are a different story. The old-timer's watch the UTIL 50-week MA cross and the weekly trend in utilities based on the 15-week lookback. Huh? Is that clear as mud?

Keystone calls the UTIL 50-week MA the trap-door and as you see from March, when the trap-door opened, the stock market was hung. UTIL price makes a recovery like the broad stock market but bumps its head up against this key 50-week metric now at 835.30. UTIL started the week yesterday at 828 with bulls ready to move up through 835 and spike the ball of stock market victory. Instead, UTIL collapses, like a newlywed's souffle, and price drops to 817. The bears slap the bulls in the face to begin the week. If UTIL remains below the 50-week, there are serious negative consequences for the stock market through the end of the year.

The 15-week lookback is not as difficult as it sounds. Simply count backwards 15 weeks on the chart above and that is the number, 827.83, that you must compare this week's price (brown circle) to see if utilities are in a weekly downtrend or uptrend. If price is above the price from 15 weeks ago, the weekly uptrend in utilities is in place and this means the broad stock market will also be in an uptrend. If UTIL is below the price from 15 weeks ago, utes are now in a weekly downtrend and this is a negative signal for the stock market over the short and intermediate term (think months).

For this week, 827.83 is the closing number from 15 weeks ago. With price at 817, this is creating a negative influence on the stock market. For next week, the closing price from 15 weeks ago that can be compared to the current price is 823.98 (blue circle), then for the week of 8/3/20, as August trading begins, the comparison number from 15 weeks ago is 795.09 (orange circle).

Thus, the stage is set. Yesterday the week began with UTIL at the 828 palindrome ready to slap the stock market bears silly and bring them to their knees once and for all. Instead, the bears slap the bulls in the face and send UTIL below 827.83 which is a negative factor for stocks this week. Note that to keep the negativity going, the bears must push UTIL below 824 for all of next week so look at the closing price for the week on Friday at 4 PM EST since it will tell you how stocks will trade the following week. Then, as August trading begins, the bears will need to send price below 795 so the bears must keep working UTIL lower to force the stock market lower. If UTIL loses the 750 level, the bottom rail of the sideways channel, it is likely all over for the stock market, and a crash scenario would be on the table.

Of course if the bulls can push UTIL above 828 today, they will be singing songs of joy and if they push price above 835, equities will be making new record highs as bulls euphorically celebrate blue skies and rainbows ahead. However, consider any incremental move lower in utes another nail in the bull coffin.

Now you know what to watch for this month into August. Utes are key since they are providing insight into how the remainder of the year will play out. It is all on the line now and humorously, probably 95% and more of the people following markets have no idea any of the above is occurring. 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.