A major tool of Keystone's gave way today but the outcome was not as expected. Typically, once the UTIL 50-week MA failure occurs, within one-half hour's time, the markets are expected to go into free fall. Alas, not today. This drama is ongoing, Keystone is investigating with an oil can to see if the market trap-door did not open due to rusty hinges. On the daily chart price collapses thru the 200-day MA and prints at levels not seen since April. The pink H&S is in play with a target in the 425-430 area. The selling is fierce as the volume candles show, rats leaving a sinking ship. Taxes are probably going up no matter who wins the presidency so trader's are locking in profits, taking the money, and gittin' out of Dodge. Money flow shows positive divergence but this may fail tomorrow, the other indicators are weak and bleak wanting to see lower numbers.The red circle on the weekly chart shows the 50-week MA failure today, this is a big deal but the markets reacted with a yawn. The prior red circles show previous ruptures of the 50-week MA. Summer 2010 the failure forced Chairman Bernanke to announce QE2 to stop the deflationary spiral occurring. The August 2011 waterfall crash resulted in the Fed pumping more Operation Twist talk and the ECB announcing the LTRO1 and 2 quantitative easing programs that saved the markets this time. The broad indexes topped in April this year. We watched the top form and roll over as Keystone described the progress during March-May. But the drop in the broad indexes took place without the utilities sector rolling over. Look at how earlier this year traders flocked to dividend stocks and kept pumping utes higher. Keystone highlighted this at the time and forecasted the markets to return to their highs moving forward since the utilities did not lead lower. Lo and behold, the broad indexes recovered with the SPX printing the 1476 intraday high.Interesingly, the utes topped as August began. Keystone has pointed this out every step of the way. Since utilities rolled over first, three months ago, and have led the way down, this is extremely ominous for the broad indexes typically forecasting a large drop for the markets ahead. Here we are now with the UTIL charts above in horrible shape and an H&S pattern in progress. Keystone looks back 15-weeks ago to compare that close to the current weekly close. As long as the trend is up, the market bulls are happy. Keystone highlighted how this trend changed over the last month and the weekly trend is now down. This is bearish but a second part to the equation is if the 50-week MA fails. This firmly locks in serious market bearishness. Thus, Keystone was excited to see some wild downside action, but alas, the trap-door was stuck. This is the back drop of the ongoing action. Projection is lower prices for UTIL ultimately moving thru the 410-440 sideways channel in the weeks and months ahead. 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.
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