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While a fairly violent counter-trend rally has brought the market back to where it was a month ago, the sectors that helped keep stocks on their feet may start paying a price.
Most notably, utilities have been the second-best performer on the Standard & Poor's 500 since the stock market peaked on April 2.
The group has gained about 5 percent in a time period where the index itself has fallen nearly 6 percent. But that could be about to end.
Depending on who you talk to, utilities could be on their way either to a mild pullback or a long slide down — as much as 46 percent, in fact, according to one bearish forecaster who sees major technical problems ahead.
Using the sector's exchange-traded fund proxy, the SPDR Utilities, Abigail Doolittle at Peak Theories Research believes the sector has put in an ominous double-top on the charts.
"It seems that the safe, easy, 'sure thing' trade of 2012 also known as the XLU is about to get a little less safe, easy and sure and this suggests two things: first, there’s nowhere to hide in the risk-on trade and second, there’s something to hide from," Doolittle said in her analysis.
Tracing the ETF's three-year trend shows a likelihood that utilities are now likely to hit the bottom of an ascending trend channel — essentially the upward range in which a security trades, drawn between two parallel lines.
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