UTIL Utilities Weekly Chart; Utilities Are a Bad Omen and Signal Major Trouble Forward Unless the 50-Week MA at 1114 Is Regained

Utilities, banks and retail stocks are all that matter to stock market direction currently. Obviously, the bears need weakness in these sectors while the bulls hope for strength. UTIL, or DJU, came up to back kiss the critical 50-wk MA at 1113-1114 yesterday, and it was successful for the utility bears since price then collapsed back down to 1095. This behavior is a nasty omen for the stock market ahead if it holds. Watch that 1113-1114 like a hawk today and tomorrow since the bull's fate forward rests on that bull/bear line in the sand.

As explained many times, the 50-wk MA and the closing price from 15 weeks ago, that determines the weekly utility trend, are the two key metrics to study. Counting back 15 weeks is the light blue circle and the closing price 15 weeks ago was 1162. Thus, mathematicians say thus and therefore a lot, that is why Keystone was not invited to the Memorial Day parade and after party, utilities are in failure mode below the 50-wk MA and in a weekly downtrend.

Now the fun begins. Going into the February/March selloff, that Keystone explained as the negative divergence formed on the charts, and during the initial drop in stocks, the crash scenario was on the table but taken off because of the big spike higher in utes (green box). Stocks faltered in Feb/Mar so traders and investors sought the perceived safety of utilities. The AI buildout of data centers is the main driver of the utility sector orgy.

As stocks will roll over lower again due to neggie d and the uber complacency and fearlessness in the broad market, an all-out crash scenario is back on the table. With utes below the two key metrics and sub 1100, the door is wide open for a substantive fall in equities (a -10% to -50%, or more, drop in stocks over the coming months). This was forecasted for the Feb/Mar swoon but taken off the table once utes spiked higher (green box) and that pullback for the broad stock indexes was -7% to -10%, no biggie, and the recovery during April and May, now into June, is record-setting into the current all-time highs for the SPX.

To maintain the weekly trend lower for utes, and keep the crash profile on the table, the bears must take full advantage of the open window. Note that all the circled closes for weeks ago (colored circles) are above 1160. Thus, the bears have a three-week window to growl and create an ugliness in the stock market that would be historic.

As long as UTIL remains below the 50-wk MA at 1113-1114, a crash scenario is on the table for the broad stock market going forward. Kitty started to peer out from under the bed but saw the utility chart and is now nowhere to be found. Walk carefully through the minefield. Looking back can provide a path forward. Pictures of You. 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.