The Energy Sector has been a dud. In fact with all the euphoria about all-time highs in equities through 2017, the Energy Select Sector SPDR (NYSE:XLE) ETF is actually down 9% this year, and over 30% below its peak in 2014. The easiest way for equity markets to continue higher would be for a big move in this sector. So it is worth taking a bit of a closer look. The chart below gives some insights.
After rising to a minor top in December 2016 the energy sector ETF went on a 8 month path lower. At the bottom in August is was down over 20% from that peak. Since then it had a strong run higher to the 200 day SMA in September. That moving average acted as resistance through October, and in November the price broke above it. It topped quickly and reversed to the 200 day SMA again, this time as support. The 50 day SMA crossed up through it, a Golden Cross, and price rose back to the prior high.
It has bounced between that high, at a 50% retracement of the move lower, and the 200 day SMA since. A Measured Move out of the building Ascending Triangle looks for 75.25, just above the 78.6% retracement. Momentum is mixed as it churns, but the RSI is making higher lows, a positive. The MACD is also holding over zero. The key in the short run seems to be 70.50 price level, near that 50% retracement. A move over that looks buyable for a run higher.
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