SPDR Select Sector Fund - Energy Select SectorArca
Description
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From a technical level, the XLE is showing a potential head and shoulders setup on a monthly chart. Combine this with major bearish divergence leaves shorting this basket of stocks as the trade of the year.
Any potential good news on the Ukraine/Russia front would be devastating on a fundamental level.
Everyone is long energy. Be brave, be bold.AMEX:XLE
Comment
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Correction. The Bearish Divergence appears on the weekly chart.
I wouldn’t short. Buy on every dip. The technicals don’t matter much, the fundamentals and macro environment is much stronger. There will be some tactical profit taking obviously, stay long though!
@DFUZZY1, my suggestion is to start shorting for 36-48 “trading hours” the minute you sniff out a Russia deescalation. Then when the selling stops. Go long again!
@jkish19871, I’ve always said many many times in many many different posts that there will be tactical profit taking at some point obviously. But that doesn’t change the macro and fundamental points that are much stronger than the technicals. Supply/demand imbalance, upward revisions, free cash flows, dividends, etc. tell me another sector that has this many tailwinds? We are in an energy super cycle, so be careful with how long you keep your shorts on. Institutional investors want cash flow cash flow cash flow… there is no other sector that can provide this right now other than energy. Again, this is just tactical profit taking as we approach the 3,400 level in S&P to buy the other sectors. Have a great weekend!
jkish19871
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@ktaba, totally respect your opinion! I agree with a lot of this. Fundamentally, the thing I would be concerned about is demand destruction. Prices over 100 are not sustainable for the consumer (especially headed into a recession).