The utilities are forecasting Hard Times ahead; doom and gloom. When UTIL loses the 50-wk MA and also is below the closing price 15 weeks prior establishing a weekly downtrend, the US stock market will top out within 0 to 8 weeks and begin a devasting collapse lower.
The utilities are in failure mode right now so that zero to 8-week clock is already in progress. Considering the goofiness of the stock market these days, a top may occur any day or week ahead for US equities and, as per the utes, a serious multi-week slide will begin that will crush stocks.
The 50-week MA is at 948. The 15-week lookback number is 939.79, call it 940 (blue circle). Utes are in a weekly downtrend forecasting the doom and gloom ahead for stocks but the bulls can save the day if they push UTIL above 940 this week. That is a tall ask considering price is at 903. The two goals that UTIL needs to attain over the next 4 days are up at 940-950.
It only gets harder for the bulls. For next week the week of 7/17/23, beginning on a new moon (stocks are usually weak moving through the new moon peak each month), the UTIL 15-week lookback comparison number jumps to 970.79 call it 971. That is a very tall ask. And note that for several weeks after, the 15-week lookback numbers remain elevated at 960-ish and higher. Start digging in and preparing your bunker.
Price is down at 903 right now and must rally above 940 by Friday, then next week continue higher to rally above 971 to save the day. Do you think this will happen? You never know in these markets but the betting money would say it is not likely. Utes typically move higher on lower rates and move lower when rates rise. Utilities fund long-term projects for billions of dollars so rates are important.
The stage is set. If UTIL languishes around the current number of 903, and drops below 9 hundo, that portends a bad future ahead for stocks exactly when everybody and his bro, even the Uber driver, is long the stock market.
The stock market rally is driven by only 7 stocks. Bloomberg calls this group the "Magnificent 7" but Keystone calls them the "Tan-Mama" stocks (Tesla-TSLA, Apple-AAPL, NVIDIA-NVDA, Microsoft-MSFT, Amazon-AMZN, Meta-Facebook-META and Alphabet-Google-GOOGL). It is summer after all and Mama and the other beautiful ladies are tanned and toned in their lovely colorful bikinis.
The UTIL 200-day MA is at ..... wait for it ........ wait a bit longer for it .......... 903. Obviously, price is making a bounce or die decision this week at the 200 that is for all the marbles.
UTIL is in a sideways symmetrical triangle pattern and not yet tipping its hand. Price is testing the lower trend line of the triangle deciding to bounce, or die. The thick vertical line of the triangle is from 870 to 1010 that is 140 points. Thus, if price collapses from 903, which will bring on doom and gloom, the downside target for UTIL would be 763 (903-140). Say price bounces and recovers and in a couple-three weeks is up to 940 ready to break-out higher, that outcome would target 1080 on the upside.
Summing up the mumbo-jumbo, utilities are in failure mode currently predicting that the US stock market will top out any day or any week ahead and begin a long and dramatic downfall (potential crash). The SPX weekly chart previously posted indicates that a multi-week top is near so the stars are aligning. Time will tell if the Federal Reserve steps in to save the day, as they always do since March 2009, in America's rigged crony capitalism system.
If UTIL loses the 903 support and is heading lower, it would be prudent to get out of your longs. You will hear Chopin playing his famous tune. The inflation data and bank earnings are on tap this week and will impact market direction. 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 9:37 AM EST: UTIL (DJU) begins trading and is sitting at the 200-day MA at 903 and bottom trend line of the sideways triangle at 903 making the bounce or die decision.
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