But few things last forever in the stock market. The fundamental backdrop for energy has improved as travel and the economy rebounds. (Air and rail traffic have both rebounded to their highest levels of the pandemic, and jobless claims have dropped to their lowest level.)
This potential turn could be playing out in the SPDR Energy , which holds big names like Chevron and Exxon Mobil .
XLE had a giant spurt higher in June amid optimism about the economy reopening. It then calmed down and has been consolidating since. A few patterns suggest a turn may be coming soon.
First, XLE held the mid-May low around $34.30. If the downtrend were going to continue, that level had to give way. But it didn’t.
Second, the moving averages have stopped falling. XLE’s 100-day ( ) is now rising. Prices are also pushing up against the 50-day . A breakout through here could get some more attention.
Third, prices are squeezing as declines. XLE’s Bandwidth is back to the lowest level since the crisis began. That can also indicate direction is changing.
This chart has a lot of potential but no clear signal yet. Traders may be looking for another close above the 50-day for confirmation.