Utilities Not Far from a 52-week Low, Principal Program Trading Still Light

Market averages settled mostly higher Thursday in volatile trading. Short-
term, we should keep in mind the market's inability to rally following
Tuesday's 90% down volume day. That tells us there's potential for further
weakness near-term. Intermediate setups on the board continue to point higher,
suggesting the current decline may not persist much beyond this week.

With today's higher close for the Nasdaq, note that it would now take a close
at NDX 1720 or lower to trigger the RSI buy setup discussed Wednesday.

Utilities bucked the trend of the broad market and settled lower Thursday.
Interesting to note that the 52-week low for the Dow Utilities index is only
about 5% below current levels. This sector often functions as a lead indicator
for the overall market, particularly on the downside. In the last fifty years,
every major selloff in the S&P500 has been preceded by a 52-week low for the
Dow Utilities.

Last week's program trading report reveals only 31.7% of total program volume
was executed as principal for member firms' own accounts. Note that we're not
seeing the kind of elevated program activity typically associated with long-
term market bottoms (see long-term chart).

Categories : Archived EOD Commentary, End-of-Day Commentary

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