I think we need to watch the big Energy names here.
These stocks have massive market capitalizations and are big time components of the major averages. It looks to me like the year-end rally in the US Dollar Index dragged down Energy as the rest of the stock market rallied through the holidays and into January. But now it’s ‘show-me’ time for the $XLE’s $XOM’s $CVX’s and $COP’s of the world.
After the breakout out above this triangle-like consolidation, the Large Energy names are having a tough time following through:
Last week’s highs just above $73 are the key levels to watch. This failed breakout attempt came at the same highs as the Halloween peak in $XLE. Recognition of resistance here is normal, but as we mentioned above, “show me”.
RSI looks positive and this is a big reason for my bullish enthusiasm here. We have an nice bullish divergence during the August/October Bottom. Overbought readings in late October is a bullish mode characteristic and so is the area where support came in November and December.
So now it’s all up to price. These are some big time components of the S&P500 and $XOM is the 2nd largest company we have.
You want to know where the S&Ps are going? I’d be watching these energy names…