The short answer to your question is, yes, I expect the utilities to make new price highs before a top is seen, but not necessarily right now. The internal damage of today's sell off (the XLU MCO is highly "oversold") would preclude some internal base building first before this can happen. This base building can take about a month or so based on the continued high readings of both the breadth and volume XLU MCSUM's which need continued unwinding, and at the same time, these same high MCSUM readings will limit any follow through to the downside next week as far as price is concerned.Fib, would you please comment on A/D divergence here? Based on your analysis, do you expect utilities to go up now and make a divergent top ? What would be somebody's stop, if he follows the above model?
We'll have more answers later on once I get the interest rate sensitive A/D data, and this information will posted later on over at Technical Watch.
Fib