There was a strange sell off in DRU towards the end of last week that reeks of forced liquidation. Eric Parnell over at Seekling Alpha noticed this and I wanted to do a chart that better illustrates when DRU has a price shock such as it did last week it can spell disaster for the general markets. Here is what Eric said:

Utilities exchange traded debt is normally a very consistent and steady group. Price variation is typically minimal as prices have incrementally risen over the last few years. But on three past occasions since the stock market bottom in March 2009, these securities have experienced brief shocks of sharp price volatility. And two of those instances occurred just as the stock market was entering into an extreme price decline. Just this past week, the fourth such shock was witnessed in this area of the market. Perhaps it is just an isolated event just as it was back in December 2010. But the trading activity among selected Utilities exchange traded debt during the past week resembled forced liquidation in many ways.

Of course, it could be nothing but a great buying opportunity as you can see every time it dips below the 50 ema it never stays there for more than a week. My “blood on the streets” number for picking up shares is around $26.50 should it continue selling off early next week. I got that number by drawing a trendline for the first to lows and extending it to present day.

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