Time for a Relative Breakout in Energy?
- Posted by JC Parets
- on January 15th, 2013
It might be about time for Energy to start making some moves. It’s been well documented that the energy sector, specifically $XLE, has been underperforming the rest of the stock market for two solid years. But I think that enough pressure has built up during this recent consolidation that we can expect a major move in energy on a relative basis.
Take a look at this chart below. It shows Energy represented by the $XLE compared to the S&P500 $SPY. This 4-month wedge formation has an upper trendline following closely along the 50 & 200 day moving averages (blue & red dotted lines):
I think that the Relative Strength Index is also giving us a good sign as it has not reached oversold conditions since the beginning of the summer. This supports our belief that Energy has been, and still is in a bull market relative to the S&P500. A breakdown below this year’s lows in relative prices would invalidate this notion. But a breakout above the above mentioned resistance factors would confirm the breakout and probably bode well for equities as a group. Some of these integrated names like Exxon and Chevron have humongous market capitalizations and are heavy in the cap-weighted averages.
There are some fascinating developments going on here that we’ll be monitoring closely.
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 is a 10-year veteran and Market Technician who actively manages money incorporating Technical Analysis and Behavioral Finance into his practice. JC’s work has been featured regularly on CNBC, Fox Business, Bloomberg, Business News Network, Wall Street Journal and Yahoo Finance among many other financial media outlets. More...
- Are Utilities Breaking Out Relative to S&Ps?
- A Non-Random Walk Through Canadian Dollars
- Fox Business: Retail Stocks & Government Shutdowns
- United Technologies Breaks Out vs S&P500!
- Latin America Hits 9-Year Lows vs Emerging Markets
- My One-On-One Interview With CEO.CA
- What’s There Not To Like About REITs?
- ABC News: Do We Buy Gold or other Metals?
- What Are The Best Sectors In America?
- Fox Business: Metals and Treasury Bonds
Archive by Year