This from Andrew:

Two weeks ago I sold the Virginia-based utility company Dominion Resources (D).  I got out at a double-digit profit.

Of all the utilities in the S&P 500, Dominion had the best earnings growth (38.5%) last quarter. So why did I get rid of the stock?

When I recommended it in mid-2005, electricity consumption was still rising and regulated rates were providing cover for rising energy costs. Dominion also had productive gas fields in Texas and expanding Liquified Natural Gas (LNG) ports.

But now the sector is heading in the wrong direction.

In the last week alone the utility sector lost 8.2 percent. Only the financial, conglomerates and industrial goods sectors have done worse – recording bigger losses over the past week and last three months.

I got out just in time. Since I exited my position in Dominion, it has lost 9.1 percent. But as you can see, Dominion has lots of company…

As recently as last quarter, utilities were holding up fine. Their profits had risen an average of 5.3 percent (unweighted) and 0.9 percent (weighted). Along with health care and consumer staples, utilities formed a strong line of defense against the encroaching recession.

So what the heck happened?

Listen, utilities have certain advantages, like fixed prices, monopoly-like markets, and a consistent revenue stream.

But that revenue stream has sprung a few leaks. Listen to CEO Lewis Hay of Florida Power & Light (FPL)…

“A lot of people think demand for electricity is inelastic. It’s not. Our customers are cutting back, and they’re not paying their bills, either.”

I wrote to my readers last week that “I’m not quite ready to put utilities in the same category as banks…”

But utilities are sounding more and more like banks. Here’s another utility CEO, Michael Morris of American Electric Power (AEP), sounding off…

“Clearly, industrial sales will be off,” he said, “we’re selling less electricity to neighboring utilities as their needs drop.”

The recession has finally caught up to the utilities. As a result, utilities are husbanding their cash along with all the other companies…

APE is cutting back spending from $2.5 billion to $1.25 billion. FPL is and Georgia Power is also cutting back.

And in the strongest sign yet that the utility sector is no refuge for investors, two utilities cut their dividend last week: Ameren (AEE) and Constellation Energy (CEG).

Investors made a lot of money shorting banks. I’m not ready to put utilities in the same camp as the banking sector, but the weaker companies in the utility sector definitely represent shorting opportunities. My Red Flag portfolio used to be full of banks and financials. My bets that their shares would sink made mostly triple-digit gains.

Last week I added a couple of utilities to the portfolio. The utility sector is catching up to the rest of the economy – and not in a good way.

Source: Why Utilities Are No Longer a Refuge for Safe Investors

Nickel declined in a similar manner, but it fought back more strongly, bouncing off the $4 mark to shoot back upward and close at its intraday high of $4.2161/lb., up nearly 8 cents. Zinc had a sharply down and up day, ending little changed at $0.5022/lb., up just over a third of a cent. Aluminum ditto, but wound up shedding a tenth of a cent, to $0.6594/lb., while lead was unable to hold in the green, dropping a penny and two-thirds, to $0.4274/lb.

Copper’s nice Monday optimism proved to be very short lived, as the metal resumed its losing ways yesterday, falling for the seventh time out of the past eight sessions, as worldwide government economic stimuli are viewed as being of questionable value.

The latest data showed U.K. housing sales for October declining to their lowest level in three decades.

That had Alex Heath, of RBC Capital Markets in London, writing that, “It is clear that rescue packages, stimulus and interest- rate cuts will be slow to work their support through the system, and short-term indicators will continue to be poor.” For now, Heath added, copper is “crumbling under the weight of the world’s economic problems.”

The World Bank concurs, writing that, “The global financial crisis is set to sharply slow economic growth in emerging and developing countries next year, ending a five-year global commodity price boom.”

Also factoring in, stockpiles continue their relentless march higher. Copper inventories monitored by the LME advanced by another 1,850 metric tons, to 302,575 tons yesterday, keeping them at their highest level since January 2004.

And in the latest round of production cuts, Swiss-based miner Xstrata Plc has reduced ore production by 20% at its McArthur River lead/zinc mine in northern Australia, dropping output from 2.5-million tons per year to 2.0-million tons.

Source: Base Metals Little Changed