Two Charts That Indicate S&P 500 Sell-Off, Part 1: XLE
When the S&P 500 was selling off in February, the Energy Sector, and its related components, sold down and formed a double bottom. There was worry that banks would be in trouble because of non-performing loans to the energy companies. Since then, the energy sector has rallied.
The above chart is of XLE. The energy giants in XLE include XOM-CVX-SLB-KMI-EOG-OXY-APC-COP-PSX-TSO-BHI, and on and on. These are huge energy companies. If you chart these as individuals, most are weak. They are weak for many reasons.
These include: too much supply and too little demand. Many have cut or eliminated their dividends.
XLE has completed a five wave impulse pattern and corrective waves a-b-c are nearly completed. I believe this Elliott wave pattern will result in a down-side directional break of trend (located on chart above, at corrective wave "c", far right, near large red arrow near top of cloud).
Not all indicators are negative, but the top indicator (RSI) is rolling over, the phase energy is weakening, and the alligator jaws (around $65.27 on above chart) are closing. Another negative, the Ichimoku Cloud is lower than structure to the left.
Many of the energy companies individual (charts) are rolling over. They are getting weaker.
Inter-market analysis suggests the following formula (from Don's book of logical assumptions).......
E = MC x 2. Translation: Energy = Momentum Change x 2 (XLE momentum change and XLF momentum change). To me, both are heading lower.
This is part 1 of 2. Please move to Part 2, the chart of the XLF (Financials).
I hope this has been helpful, entertaining, and informative. May all of your trades go well. Don.
The above chart is of XLE. The energy giants in XLE include XOM-CVX-SLB-KMI-EOG-OXY-APC-COP-PSX-TSO-BHI, and on and on. These are huge energy companies. If you chart these as individuals, most are weak. They are weak for many reasons.
These include: too much supply and too little demand. Many have cut or eliminated their dividends.
XLE has completed a five wave impulse pattern and corrective waves a-b-c are nearly completed. I believe this Elliott wave pattern will result in a down-side directional break of trend (located on chart above, at corrective wave "c", far right, near large red arrow near top of cloud).
Not all indicators are negative, but the top indicator (RSI) is rolling over, the phase energy is weakening, and the alligator jaws (around $65.27 on above chart) are closing. Another negative, the Ichimoku Cloud is lower than structure to the left.
Many of the energy companies individual (charts) are rolling over. They are getting weaker.
Inter-market analysis suggests the following formula (from Don's book of logical assumptions).......
E = MC x 2. Translation: Energy = Momentum Change x 2 (XLE momentum change and XLF momentum change). To me, both are heading lower.
This is part 1 of 2. Please move to Part 2, the chart of the XLF (Financials).
I hope this has been helpful, entertaining, and informative. May all of your trades go well. Don.
