Dow Utilities and the S&P 500

We were narrowly higher in the S&P 500 Index, with SPY up .15%. The Dow Utilities were stronger, up over half a percent. I went back to March, 2003 (N = 781) and found 144 days in which SPY was up on the day, but less than .30%. Two days later, SPY averaged a gain of .23% (89 up, 55 down).

When I broke the sample in half based on the change in the Dow Utilities, however, a pattern emerged. When the Utilities were strong (N = 72), the two-day gain in SPY averaged .11% (42 up, 30 down). When the Utilities were weak (N = 72), the two day gain in SPY averaged .36% (47 up, 25 down).

We thus tend to see strength when Utilities underperform SPY; underperformance when Utilities are stronger than SPY. I'll be looking further at the Utilities as a possible market barometer.