Energy Stocks Are Hugely Oversold, By This Measure
Energy is the top performing sector this year, despite two months of weakness. It now appears hugely oversold in comparison with crude oil prices.
The chart below shows the ratio of the SPDR Energy ETF against crude oil CFDs. Notice how the current ratio is among the lowest of all time.
The next chart shows USOIL with daily candles. It had a quick dive under $66 and the 50-day simple moving average (SMA) early last week, but immediately recovered. That now looks like a false breakdown. Its 8-day exponential moving average (EMA) has also just crossed above the 21-day EMA.
Returning to our main chart of XLE, notice how prices bounced around $46.50. This was the low in April, and the blow-off peak back in June 2020 when the market initially rebounded from the pandemic. Now that this level has been tested and held, the bulls may target the next major obstacle: the historical long-term resistance at $56 that we cited in mid-June.
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
The chart below shows the ratio of the SPDR Energy ETF against crude oil CFDs. Notice how the current ratio is among the lowest of all time.
The next chart shows USOIL with daily candles. It had a quick dive under $66 and the 50-day simple moving average (SMA) early last week, but immediately recovered. That now looks like a false breakdown. Its 8-day exponential moving average (EMA) has also just crossed above the 21-day EMA.
Returning to our main chart of XLE, notice how prices bounced around $46.50. This was the low in April, and the blow-off peak back in June 2020 when the market initially rebounded from the pandemic. Now that this level has been tested and held, the bulls may target the next major obstacle: the historical long-term resistance at $56 that we cited in mid-June.
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
