U.S. Stock Market - Dow Jones Utility Average Sell Signal !

A Daily Chart Sell Signal was triggered at today's close in the Dow Jones Utility Average (see chart below). The yield on the 10-year T-note surged more than 8 basis points today to about 2.72%. While this level must still be consider low by historical standards, it was 1.61% in early May 2013 and bottomed out at 1.39% in late July 2012. In other words, the 10-year T-note yield has gone up 68% in less than one year and has almost doubled in less than two years. To add insult to injury, daily and weekly chart buy signals were triggered today in the double-short T-bond ETF (symbol TBT).

Dow Jones Utility Average with Computer-generated Buy & Sell Signals

So what does this all mean? If we listen to my computer system, then interest rates will soon be trending higher and T-note and T-bond prices will soon be trending lower. And today's sell signal in the Dow Jones Utility Average strongly suggests that stocks with high dividend yields should be liquidated by investors.

On a personal note, I have a fairly long commute to work everyday and my car is not a hybrid or electric powered. The price of gas is therefore a variable in my weekly budget. In Chicago, where I live, the price of regular gas has gone from $3.40/gallon to $4.20/gallon IN LESS THAN A MONTH! THAT'S A 24% INCREASE!! 

The following chart is borrowed from an article entitled "If The Smart Money Is Selling, Who's Buying?" as found on today's zerohedge.com website:

AAII Investor Asset Allocation History 1987 to Date

While this chart probably speaks for itself, it would appear to me that the average main street investor is loaded upon on stocks and has no more cash. Maybe this time is different, but this chart doesn't seem to bode well for stock prices. With mid-term and longer-term interest rates rising and gas prices squeezing family budgets, perhaps corporate profit margins (which have been at record highs) will also be squeezed?

In the interest of full disclosure, I significantly increased my position in the SDS double-short S&P 500 Index ETF in mid-afternoon trading today. Most major U.S. stock indexes have now been up for four days in a row, but today's last hour profit-taking was a key negative change in daily pattern. The Dow Jones Industrial Average actually posted a loss on the day today, along with the Dow Jones Utility Average. 

Bottom Line: The U.S. financial markets are closed tomorrow in observance of Good Friday, but next week is expected to be a nasty down week for stocks. And unlike earlier this week, when both the Nasdaq Composite Index and the Russell 2000 Index bounced nicely off their respective 200-day moving average lines, I don't believe that investors can expect the same kind of support the next time down. One particular stock market adage that his served me well over the years is: "First time bounce, second time trounce!"