Monday, August 01, 2016

Energy Sector (XLE): I Really Don't Like Energy

I've posted articles on the subject from a variety of sources over the last ten days and speculated around that time either Energy Select Sector ETF (XLE) was either going to have to break out of the horizontal resistance at $69.50 bullishly or risk horizontal movement. The latter ended up happening and I wrote about my change in position in XLE from bullish to bearish about the second last week of August when that horizontal movement began pinching the EMA's to the point that a bearish crossover occurred today.

Now that the bearish crossover has occured an expanding megaphone appears to be developing. We can see from some descents in June a support line is now in place with some proposed support areas at $64.00 and $63.00 with support ultimately happening at $61.00 (which also happens to be the expanded channel support line).
Remember the weekly chart which I drew some time ago that showed an ascending bearish wedge heading into resistance at $70? Well, I remember drawing it but I don't remember taking my own advice (I really got to learn to do that someday). Look at the indicators for it! This week so far shows a calamitous fall with steep declines on the momentum indicators. I don't this will break $50 but a retracement that might surprise everyone is an outcome I'm quietly evaluating.