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Les, my impression was that the utilities rallied ahead of the rest of the market from last year's post panic lows and again in the middle of this year. then they precipitated the sell-off into October this year. the negative correlation has only become evident very recently. i have looked at two historic periods, '87 and '94...in the former, the decline in the utilities precipitated the crash, in the latter it was ultimately resolved in a strong rally. so the truth is, one can not really come to any firm conclusions by watching the utility average alone. imo, at the moment all sorts of rationalizations are put forth to explain away the various divergences. to me, they remain troubling. they may not mean anything for a while yet, but i think they will, eventually. then people will come out in hindsight, and say "the warning signs were there". only now, of course a/d, nh/nl, interst rates, utilities, transports, banks, etc. are all declared to be invalid 'old era' indicators. |
