XLU charts are the same profile as UTIL charts, both reflective of the utilities sector. Remember, as Keystone described the market top and roll over this year, as the markets headed lower, the fact that utes did not participate to the downside meant that markets would recover. And sure enough, we find markets once again making daily highs, bolstered by all the talk of Fed and China easing. When the utes lead the broad markets lower, that is an ominous sign and signals that the market downside will be sustainable and serious.
Note the rising wedge, overbot RSI and stochastics, and universal negative divergence across all indicators. The weekly charts are negatively diverged that further encourages the short side. The utes are set up for a smack down. The red boxes show that price has retested the early July high but it has occurred at a greatly diminished volume. The ute bulls are running out of gas. Considering the dividend bubble that continues to grow, the utilities must be finally running out of Ma and Pa's that are looking to perceived safety, not realizing that the sharks are distributing shares to these sucka's that will serve as the bag holders. The most interesting aspect of the utilities is that if they receive the projected down move now and lead the broad markets lower, that is an ominous path beginning for the broad indexes. Projection is for a smack down to occur for the utilities sector at any time. Keystone opened a short position against XLU yesterday and also holds the thinly-traded SDP 2x inverse ETF.
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