After a gravity-defying 2014, shares of utility stocks could be poised for a bruising in the new year, according to fundamental, technical and historical analysis.
Utility stocks, never very popular among traders because of their small stature and boring business models, have posted the biggest gains among the S&P 500's 10 sector groups this year on the back of low interest rates and falling energy prices. The latter lowers the group's operating costs, while the former makes the companies' hefty dividend payouts look relatively attractive to investors hunting for yield.
The S&P Utilities SPDR ETF is at a record high, up 29 percent in 2014. The last time it had a year like this was in 2011, when the sector gained 20 percent. It was then the worst sector in the S&P 500 the following year, posting just a 1 percent rise.
"I don't love utilities going forward because I believe that, at some point, interest rates will rise and when that happens they will crush the utilities," said Jim Iuorio, managing director at TJM Institutional services in Chicago.
Just how crazy has the run in utility shares gotten? At current levels, the utility sector has a price-earnings ratio of almost 19, bigger than the 18.5 P/E for the whole S&P 500, according to Bespoke Investment Group. That means theoretically, investors are pricing these stocks as if the business of power generation will be more profitable in coming years than those of the rest of the market, an unlikely scenario.
The price move has been just as unlikely using statistical analysis by Kensho, a quantitative trading tool used by hedge funds. As of Monday, the price of the Utility ETF was nearly three (that's right, three) standard deviations above its 50-day moving average, a condition that puts the odds of a decline in the coming weeks at greater than 90 percent, according to Kensho.
Utility ETF vs 50-day moving avg.
And it's not just professional investors and traders scratching their heads at the magnitude of this move in the stocks. Apparently retail investors are taking profits in the shares as well.
"Our clients have been net sellers of utilities for six straight weeks," said Nicole Sherrod, managing director at TD Ameritrade. "Last week was obviously an abbreviated trading week but they sold almost three times as much as the trailing six-week average."
And lastly, add options traders into the bearish camp with everyone else. On Friday, one anonymous trader bought $3.7 million worth of puts on the XLU ETF, a bet that will only pay off if the ETF is 6 percent lower by March.
"I am just not sure how utilities can continue this sort of outperformance in the new year despite the perceived benefit of lower input costs from the decline in crude oil," wrote Dan Nathan, a CNBC "Options Action" contributor, who flagged that trade on his RiskReversal.com blog Friday.
Read MoreUtility stocks lead market down Tuesday
To be sure, there was one dissenter among the many analysts contacted for this article. J.C. Parets of Eagle Bay Capital believes the tail wind of lower interest rates for utility stocks will continue for the foreseeable future.
"As long as rates stay lower there will be a bid for utilities like there's been all year," said Parets. "Fed fund futures have been signaling for lower rates all year and still are through next year, regardless of what Wall Street economists have to say."
Disclosure: NBCUniversal, parent of CNBC, is a minority investor in Kensho.