Don’t Forget About That Energy Breakout
- Posted by JC Parets
- on February 19th, 2013
A little bit over a month ago we pointed to the high likelihood of Energy breaking out on a relative basis. That consolidation that we had seen since September was just too tight and too clean for us to ignore. In addition, momentum as measured by RSI hadn’t reached oversold conditions since mid-summer. These bullish characteristics signaled to us that a breakout was probably coming.
Since then, we have seen $XLE relative to the S&P500 get above its downtrend line and hold above what are now rising 50 and 200 day moving averages (blue & red dotted lines). At this point, the price action is flirting with the September highs and remains in full fledged bull mode:
We continue to think that this is in the beginning stages of a bigger shift towards Energy. Remember that this space had been underperforming for 2 years. This is no joke, we’re talking about energy here – not 3D printers and rare earth metals. These Energy names are some of the largest companies on the planet.
So keep these guys on your radar – Exxon Mobil ($XOM), Chevron ($CVX), Conoco ($COP). I don’t think this is over. And $OIH – the Oil Services Sector is doing something similar – Schlumberger ($SLB), Halliburton ($HAL), Transocean ($RIG). It looks to me like the relative outperformance is probably just getting going.
Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my Terms & Conditions page for a full disclaimer.blog comments powered by Disqus
J.C. Parets is the Founder & President of Eagle Bay Capital, LLC. He earned the Chartered Market Technician designation (CMT) and is a member of the Market Technicians Association. More
- Eagle Bay Capital Managed Assets
- They Hate Cotton Right Near Historic Support
- Financials Are Breaking Key Support On a Relative Basis
- The Problem That I See With Silver
- Words of Wisdom From Jim Rogers
- Watching Micro-caps to Gauge Risk-Appetite
- Here’s Why There Is A Trade In Corn
- Fox Business: S&P500 On Multiple Timeframes
- Which is the Best S&P Sector to be Overweight?
- Materials Look Attractive on a Relative Basis
Archive by Year