As everyone celebrates new all-time record highs for stocks, utilities slip on a banana peel and begin falling down the cellar stairs. Price is lower for 3 weeks now testing the 20-wk MA support at 11 hundo. Utes receive the neggie d spankdown on this weekly basis and there are three signals that require attention.
The old timer's watch the utilities because a downtrend in utes is a bad omen for the broad stock market from zero to 2 months out. Utilities are down for 3 weeks about one-half that distance. It does not have to be the full 2 months; the top in the stock market can happen any time. If utes lead the broad stock market lower, it is ominous because it typically tells you that the pullback will not be run of the mill instead it will be a significant bloody bludgeoning.
Keystone often mentions the two main signals to watch for utilities the closing price 15 weeks ago that determines if utes are in an uptrend or downtrend, and, the 50-wk MA now at 1049.
If utilities are in an uptrend, so is the broad stock market and everything is fantastic and rosy with the bulls making lots of money on the long side. Trouble begins when utilities roll over and begin a weekly downtrend. Looking back 15 weeks, the comparison number for this week is 1082.51 (blue circle). Price is now down to 1100 not that far away. The stock market will take a notable drop lower if the 1082 fails this week.
For next week, the close 15 weeks ago was 1107.90 (blue circle), so utes would be in a weekly downtrend failure right now forecasting bad stuff ahead. Watch it closely. You will know the story for the stock market for next week at 4 PM EST this Friday when this week ends and the final UTIL number is known. If below 1108 on Friday afternoon, there will be Hell to pay with stocks next week.
The 50-week MA is a trap-door for the stock market. If equities begin tracing lower and the 1082 and 1108 numbers have failed for this week and next, and price drops to test the 50-wk at 1049, and fails, it is lights out for the US stock market. The SPX will likely take a significant drop within minutes or a few hours of the 50-wk MA support failure and an overall significant stock market crash would also be on the table going forward. This is only 50 points away.
Keep following the 15-week lookback going forward to see if the wheels fall off the stock market cart. Recapping, the utes leading the broad stock market lower is a bad sign indicating serious downside damage ahead.
Watch to see if UTIL, or DJU, 1082 fails this week or 1108 next week, that will signal trouble ahead for stocks. Watch to see if the 50-wk MA at 1049 fails, if so, it is lights out for the stock market and a crash is on the table. Are you staying in your lane? "Stay In Your Lane," by Courtney Barnett. 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.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.