UTIL Utilities Weekly Chart; US Stock Market Will Recover if UTIL Regains 954 by Friday Afternoon but Crash into Oblivion if This Week Ends Below 954

The utes are all the rage as Fall begins. The US stock market wants to rally for the last 3 weeks but is beaten-down by the enduring negative news flow. Sterling is falling apart, the pound is pounded, so the dollar pops and commodities sink. The rising dollar will crush the earnings for the US multinationals. It is very much a news-driven market from sound bite to sound bite and the charts are trying to factor the information in as fast as possible.

The key is the utilities. You know the drill. The 15-week lookback closing price and 50-week MA will tell you if the US stock market will crash. The 50-week MA at 977 has failed. Keystone calls this the trap-door because it leads to horror for the stock market but the 50-wk MA is typically below the weekly closing prices.

Right now is a unique situation for the ever-rising multi-decade stock market.  A couple of the weekly closing prices 15 weeks ago are below the 50-wk MA. For this week, the 15-week lookback closing price is 887.72, call it 888, way down at the bottom (purple circle). For all of next week, the first week of October, the 888 is meaningless and replaced with 953.63, call it 954 (blue circle). For the week of 10/8/22, the 15-week lookback comparison number is 992.63 and for the week of 10/15/22, the comparison number is 962.03.

That's a lot of numbers and mumbo-jumbo. What does it mean? It means that we live in exciting and interesting times. For this week, for the bulls to stage a comeback relief rally in the stock market, UTIL must be above the 888 and above the 50-wk at 977. The 977 fails so stocks are flushed down the toilet this week. The interesting aspect is that UTIL is now at 934 remaining above 888 so this actually maintains sanity and calm in the stock market this week (even though it does not feel that way).

The US stock market will experience a historic crash if 888 fails and that is unlikely this week with 3 days of trading remaining. The key is the 954 comparison number in play for all of next week. UTIL must be above 954 and 977 next week to create strong bullishness in stocks. Thus, you can get a heads-up on next week if you watch UTIL this week and where it closes on Friday at 4 PM EST.

If UTIL cannot rise above 954 this week and trading ends on Friday afternoon, UTIL will begin next week below both 954 and 977 which creates the conditions for an epic panic stock market crash for the United States. That will be fun.

For the stock market to have any hope, UTIL must move above and close the week above 954 which will hint at a strong stock market next week. If UTIL should end this week above 977, stocks will be uber strong next week. Bulls also need VIX below 25.45 to signal a real rally.

Keystone is bringing on longs as per the out of control put/call ratios but will be watching the UTIL 954 level, and 977, over the coming days which is the set-up for next week. Well, what's it gonna be, boy? What's it gonna be, boy? Let me sleep on it and give you an answer in the morning? 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 7:51 AM EST: XLU, the utility sector, that moves the same way as UTIL, is up marginally in the pre-market. S&P futures are down -23. VIX 33.91.

Note Added 7:06 PM EST: UTIL finishes the day at 945 with a LOD at 933 and HOD at 950. US stocks rally bigtime with the SPX up 72 points, +2%, to 3719. UTIL has 2 days to get to 954. VIX drops to 30.18 but needs to drop another 5 handles to verify the rally. Bulls enjoy a nice up day but the jury remains out if the rally has legs. Right now, the stock market is most worried about whether it will crash or not and that depends on where UTIL closes over the next 13 hours of trading (Thursday and Friday). Higher utilities and lower volatility will continue to boost stocks.

Note Added Friday Morning, 9/30/22, at 6:16 PM EST: UTIL crashes to 906 so the wheels fall off the stock market. UTIL is a far cry from the 954 number that is needed for next week for the bulls to have a chance so the US stock market collapses. Watch UTIL 954 closely over the coming days. If UTIL moves above 954, a strong relief rally will be in play, but if UTIL fails to achieve 954 next week, stocks will continue crashing.