NEW YORK, April 16 (Reuters) – Utility share prices, a
reliable leading indicator of stock market ructions, are
Utilities have been particularly strong, especially relative
to the broader market, a set up which has historically been a
flag for relatively weak stock markets and high volatility.
The Dow Jones Utilities Index is up nearly 13 percent
this year, compared to a fall of nearly 4.0 percent in the
broader market. The divergence has been especially striking
since early March, since when utilities have outperformed by
nearly 12 percentage points.
“The fact that you are seeing this year utilities and long
duration bonds performing so strongly is telling you that
something is off – and when utilities lead it tends to happen
before black swans strike,” Michael Gayed of Pension Partners
said in an interview.
“Utilities have been strong since the first week of January,
signaling concern, alongside long-duration Treasuries for some
time before the high momentum breakdown began,” he said.