We have been watching the Energy Select Sector SPDR (NYSE:XLE) for some weeks now as it has turned up from its position toward the bottom of its 9-month declining channel. Specifically, it hit a low of 61.81 on August 18.
On September 7, we noted to our members that the XLE had looped up toward a confrontation with its Dec.-Sep. down trendline. At that point, the stock was at 65.09, with its 200-day moving average pointing toward 69.26.
Fast forward a week and the XLE took out this trendline and closed Wednesday at its high of the day at 66.27.
The stock looks poised for still-higher levels that project to a test of the Jun.-Sep. resistance zone at 66.80-67.13.
If hurdled and sustained, this will confirm a significant bottom and also point XLE toward a confrontation with its moderately declining 200 DMA, now at 69.11.
Traders could use a pullback to 65.25 to enter or add to long positions.
