UTIL Utilities Weekly Chart

Happy July 4th to all! Thanks to all the vets, currently-active troops and prayers for all those that died for the country. Martina always brings the crowd to their feet with Independence Day. 

The stock market is topping out and headed for a big pullback for a few weeks. The utilities are important over the next month since they dictate whether the downside is going to be a run-of-the-mill -10% to -20% pullback, or, if it is the real deal longer-term top that will bludgeon stocks -20% to -80% over the next year or two. Choose your poison.

The key metrics for the utes are the closing number for 15-weeks ago which determines the weekly trend and the 50-week MA at 862.21. Keystone takes a purple crayon and draws across the 873.55 support level since this is the closing weekly number 15 weeks ago (purple circle). Also, the purple crayons taste the best.

Well, look at that. UTIL price has come down in both the last 2 weeks to test this key level. In addition, this level was key resistance that held back in late January and February. These factors give the purple line serious street cred and the winner and the loser in the US stock market will be known by the price above or below that line.

When utilities roll over lower from zero to 2 months before the broad stock market tops-out, or coincidentally lower as stocks collapse in real-time, the 15-week lookback and 50-week MA determine if the stock market will only have a cold, or, if it will catch pneumonia and die. Interestingly, UTIL topped-out in April a touch over 2 months ago. Bears can be hopeful and salivate slightly at that sight.

It is all on the line now. The purple line. If UTIL, starting at 885.78, loses the 873.55 level, the US stock market is in serious trouble. If UTIL then loses the 50-week MA at 862-ish, it is ovah, as they say in Brooklyn, and there is a high likelihood that the stock market will go into freefall. If 862 fails, the SPX would be expected to dump between 20 and 40 points during the next couple hours. Most importantly, if 862 fails this week, it will be in conjunction with the US stock market dropping and it portends bad things ahead. Extremely bad things. Carnage. The blood will flow on Wall Street.

Conversely, the stock market bulls always have rich Uncle Fed and rich Uncle Congress handing them money so stocks move higher and the wealthy dance with glee worshipping the crony capitalism system. Of course, the Federal Reserve, led by Pope Powell donning the pale green robe, will step in at some point as stocks fall to save the day and protect the wealthy but that game is long in the tooth. Charts in all time frames are topping out on a long-term basis so the Fed may find itself pushing on a string. Once dip-buyers are stung a couple times, they tend to not buy dips anymore.

The UTIL chart must be watched closely since drama will continue past the holiday-shortened trading week ahead if UTIL does not breach the 873.55 and/or 862.21 support levels. The following week, the week of 7/12/21, UTIL only has to drop below the blue line at 879.51 to cause trouble. The week after that, starting 7/19/21, UTIL must be above the orange line at 891.67 and for the week of 7/26/21, the utilities must be above 923.71. These are historic times. This action in the US stock market over the last few months and coming weeks is a major top and will be talked about for decades to come. We shall see if the utes prove, or disprove, this hypothesis.

What's with all this mumbo jumbo? What does it all mean? Over the 4-day week ahead, if UTIL drops below 873.55, the US stock market is in serious trouble. If UTIL 862.21 then fails, stocks will potentially crash. A flash crash event remains on the table and no one cares. If UTIL remains flat or moves higher, the stock market bulls will be celebrating. If UTIL moves above the orange line at 891.67, bulls will be doing a happy dance since that hints that utes have more strength and the top in the overall market may delayed a few more days or weeks.

Thus, if status quo remains next week, the week of 7/12/21 is then set up where if the blue line fails, at 879.51, stocks are in trouble, and if the 862.21 fails, stocks may crash. Note that the bulls cannot rest on their laurels. Bulls have to actively push utilities higher within a week remaining above 880, and by mid-month remaining above 892, and by the last week of the month UTIL must be above 924. Do you think that can happen? Anything can happen that is why you have to gauge it as it occurs.

The bears have it on a silver platter despite the S&P 500 at an all-time record high at 4355.43 and all-time closing record high at 4352.34 both printing on Friday, 7/2/21, after the US Monthly Jobs Report. If 874 and 862 fail for UTIL, it will be lights out for the stock market. Bulls must keep UTIL above 874 this week. The UTIL 50-week MA at 862.21 is a big deal. If you see it fail, be aware that the stock market may begin crashing right before your eyes. 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.