Updating this blog post on the utilities, after the expected bounce off weekly chart support we have seen the utes run into tough resistance at the $36 level. $36 happens to coincide with the 20/50 period weekly moving average convergence. After the first high probability bounce off major weekly chart trendline support, all bets are off as to a likely hold. Thus, the utes become suspect to a multi-year breakdown on any further weakness.
To support this thesis, consider the weekly RSI on the second chart below. Note for the first time in several years the RSI 50 is now in danger of becoming resistance, after acting as firm support as it usually does in bull runs.
Extrapolating this out to the rest of the market, it is not necessarily a bearish event for utilties to fade. You are talking about a highly defensive sector full of yield-seeking investors who could easily rotate that capital to higher beta sectors.
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Wonder if utility investors tend to trade between utilities and corporate bonds?
I suspect I might draw the lower purple line (bottom of the wedge) differently than you – starting at 25 lower left and ending at 35 upper right. This catches the majority of the lower ends of the bars, while leaving three minor penetrations through the line. If you do this, the chart now shows a rising wedge with a breakdown (in early Nov), and a (weak) attempt to break back into the wedge. Not the best looking wedge, but it does look more ominous 🙂