UTIL Utilities Weekly Chart; Price Overtakes Important 50-wk MA

This is a very important market development. The utilities took out the 50-week MA resistance. Two things are key for the utes; the 50-week and the weekly up or downtrend as calculated by the closing price 15 weeks ago. Got it? Yep, it's clear as mud.

The blue circle is the closing price 15 weeks ago down at 749. UTIL is at 845 nowhere near it so the utes are in an uptrend and when that occurs, the broad stock market is in an uptrend. Next week and the week after, however, the purple circle is in play an easier number for the bears to slip below. For the last week of this month of October, the 15-week lookback comparison number will be the orange circle. So the bulls have an easy beat now creating lift to utes and stocks but the comparison number creeps up over the next couple weeks. In other words, bulls will have to keep UTIL above 825-ish for the next couple months or there will be Hell to pay. That is why UTIL was goosed higher to get it up in that higher range. Time will tell if it sticks, or not.

The 50-week MA is at 827. When both the 15-week lookback has the utes in a downtrend and the 50-week MA has failed, the stock market is in serious trouble. When both the 15-week lookback trend is higher and price is above the 50-week, stocks are enjoying rally time, like now. UTIL jumps above 827 to 845 which is also way above the 749 lookback number for this week. The bulls are throwing confetti as they drink more Fed wine.

Watch UTIL closely over the coming days and this month. If UTIL remains above 827, the stock market will likely not fall significantly into year-end. If, however, UTIL rolls over and dies from here, falling back down through 827 and then down towards 8 hundo, and then lower, the stock market may potentially crash before year-end.

Just as there is a fine line between love and hate among humanoids, there is sometimes a fine line between a green ascending triangle (bullish) and a red rising wedge (bearish).  UTIL is breaking out above the green ascending triangle pattern which would be extremely bullish. You can make the case that it has already broken out above the 826-ish baseline. For any move higher, price would be expected to come back for a back kiss and bounce or die. The vertical side of the green triangle is, say, 150 points, if Keystone closes one eye and squints with the other, so a breakout from 840-ish would target 990, call it 1K.

The red rising wedge pattern has a different outcome, however, and the collapses from rising wedges can be quite dramatic. Price can move up higher inside the red wedge before it hits the top rail. If price is breaking out higher and it moves above the red line resistance, the bulls will be in full control. Price is susceptible for falling as long as it remains below that upper red line. UTIL would have to fail back down through the 50-week at 827 and then give up the ghost at the lower red support line at 815-ish. Below there, price would be open to falling like a rock which would also portend very bad things happening to the stock market before and into year-end. Keep an eye on it.

Utes usually move up if yields move down and utes move down if yields move up. Projects at utilities are on a massive scale, billions of dollars for upgrades or new plants, so financing these deals over many years is key and rates are important. If UTIL begins dropping in earnest as described above, you better git outta Dodge, while the gittin' is good. 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.

Note Added Wednesday Morning, 10/7/20: UTIL jumps to 860.22 intraday on Tuesday and closes at 851 exactly at that top red resistance line of the rising wedge. The plot thickens. Bears have to stop utes from moving higher from here.

Note Added Thursday Morning, 10/8/20: SPX is at the 3443 palindrome. UTIL is at 870. Holy smokes!. UTIL jumps from 779 to 870, a huge +12% gain in only 3 weeks time. It's a rocket launch breakout higher.