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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: westpacific who wrote (89361)12/4/2007 7:23:44 AM
From: Joe Stocks  Read Replies (2) of 110194
 
West, I don't see utilities hitting new highs as being a sign of market strength for two main reasons.

First, energy prices are going up and utilities will probably out run inflation. There are few industries that have pricing power now and utilities is one of them.

Second, I see it as a flight to safety. Look at the strength in bonds in the chart below. Utilities offer a relatively safe dividend income. Where else can you find that? Banks?....no. Money has to rotate into something, and there are fewer and fewer safe havens available.

Under the current circumstances, I would say the utilities are possibly sending the message that the market should be shorted. JMO.

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