When Does This All End - Update 2

The US 10 year yield is at 2.34% and compared to utility dividend stocks: American Water Works (Dow Jones Utility: AWK) dividend of 1.87%. NiSource (Dow Jones Utility: NI) dividend of 2.58% and American Electric Power (Dow Jones Utility: AEP) dividend of 3.25%, the question is, which asset class do you trust to provide a return for 10 years?

Of course, the choice also involves your ability to judge future inflation expectations (see  iShares TIPS Bond ETF TIP) and how extended the price trend is over time for each class.

Recently the Dow Utility Index has shown three thrusts higher  to new ground, the Dow Jones Utility index is now struggling to get higher as each thrust suffers a loss of power. These thrusts are simply a push higher to new ground to allow the big accounts to sell into, as this move high creates the BIDs to meet the large accounts ASKs. The big boys need the uninformed to buy at highs so they can sell to them. 

Higher interest rates will either demand the Dow Jones Utility (DJU) pay a higher dividend, or create a slump in trend the Dow Jones Utility. The massive bullish stock market trend from March 2009 is extreme, and a leading bearish signal will be the Dow Jones Utility as it reflects the crazy prices paid for yield. Do you get the feeling we are near the turn?

UTIL 3 tops



Longer term trend
 

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UTIL long trend




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