Charts of Energy vs Defense

This morning Goldman Sachs ($GS) and Morgan Stanley ($MS) increased their oil price forecasts by more than 20 percent, signaling a bullish outlook for commodities. According to Bloomberg, $GS boosted its 12- month prediction for Brent Crude to $130 a barrel from $107.  $MS raised its Brent estimate by 20 percent to average $120 a barrel this year and by 24 percent to $130 in 2012.

I want to see how these names are doing versus their Defensive Counterparts like Healthcare, Consumer Staples, and Utilities. First, let's start out by looking at the Energy Sector ($XLE) vs the S&P500 ($SPY). Call me crazy, but this appears to me like a typical correction back to the 200 day Moving Average and a resumption of the rally:

[caption id="attachment_1898" align="aligncenter" width="620" caption="Energy Sector vs S&P500"][/caption]

After seeing how good Energy looks vs the rest of the market I'm wondering if there is similar action in Energy against some of the more defensive sectors ($XLV, $XLP, $XLU):

[caption id="attachment_1899" align="aligncenter" width="620" caption="Healthcare Sector vs S&P500"][/caption]

[caption id="attachment_1901" align="aligncenter" width="620" caption="Consumer Staples vs S&P500"][/caption]

[caption id="attachment_1902" align="aligncenter" width="620" caption="Utilities Sector vs S&P500"][/caption]

The answer is YES.

Source:

Goldman and Morgan Stanley Bullish on Commodities Boosting Oil Profits 20 (Bloomberg)