When sports radio talk show hosts like Mike Francesa threaten utility companies (as a proxy of public outrage generally, not to mention his listening audience) for keeping power in Long Island off more than a week following Hurricane Sandy, it is only natural to assume that utility firms are excellent shorts.
We know that the utes have had a strong, steady run higher in recent years, with their dividend yields and safety providing comfort for cautiously optimistic long-term investors. Recently, though, they have indeed seen a heavy bout of selling.
Turning to an updated weekly chart below, the utes have now come down to the major trendline supprot since March 2009. Note that this trendline held in the May 2010 flash crash and the summer swoon of 2011. What you are looking to see are strong hands come in and once again decisively bounce the utes off this trendline. If price churns here and starts to lean down too much, it could be a sign of a chance in long-term character.
Of course, the utes are inherently defensive, so seeing them break down might not even be a bearish signs for stocks as a whole. Instead, capital could simply be rotating out of the utes and into higher beta sectors.
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MEOW!