Chart of the Day: Energy Is in Need of a Lift
Oil prices have been trending lower, but not natural gas, which might pump some life into XLE.
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It is tough to own a commodity ETF like the Energy Select Sector SPDR Fund XLE when you know the controls for the movement are held by others. In this case, energy prices, specifically crude oil, are mostly controlled by the cartel known as OPEC+, an organization that moves prices at their meetings.
Also, rumors of production cuts and increases move prices in crude based on forecasts for demand and other factors. Hence the XLE can be a wild mover.
When supplies were tightened on oil this ETF ripped higher in the spring, powering up to all-time highs right near the $100 mark.
But since that peak in April the XLE has moved down roughly 10%, which is not unexpected as crude moved down a bit more than that. Why the difference? Natural gas has been on the climb, and the XLE contains producers of this energy source.
The chart still looks oversold here but seems to have caught support at the 200-day moving average (arrow). Notice the XLE has not moved much lower the last few days; that's a positive sign for now.
Indicators, though, remain bearish and oversold, so a modest lift in price could turn the indicators up and perhaps some bullish momentum will return to the XLE. If the downtrend line in the top pane can be exceeded there is reason to believe the old highs will be challenged.
This is a good spot to add XLE shares. We rate it a Two in TheStreet Pro Portfolio.
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At the time of publicatiom, TheStreet Pro Portfolio was long XLE.
