From the desk of Steve Strazza @Sstrazza
Energy has been by far the best-performing sector over the trailing 12-month period.
In October, we witnessed a handful of energy stocks and industry ETFs break higher from bases and reclaim their summer highs.
Without a doubt, these are bullish developments for the space.
But over the trailing month, energy has lost that leadership position and has actually been the worst-performing sector in the market.
Today, we’re seeing a lot of the upside resolutions from last month undercut their former highs and turn into failed breakouts.
So, where do we go from here?
When we look at the relative trends in the energy sector, we get a much different picture than what we’re seeing on absolute terms. Most of them never resolved higher like their absolute trends and simply remain messy, with prices stalling at the upper bounds of their basing patterns.
If we’re going to see sustained outperformance from energy stocks, we need to see them resolve higher relative to the broader market.