Corrective pullback in US Energy sector in the coming months
We have been bullish US Energy since early 2016, but price action in the past months is beginning to give us some cause for concern.
With the 50% retracement of the 2014-2016 fall now reached, but not decisively broken, and stochastics very overstretched, we believe a corrective pullback is now developing.
Additonally, the Energy sector is also showing signs of weakness relative to the SPX, suggesting Hedge Funds and other 'big players' could be moving assets into more promising sectors.
However, whilst we believe a correction is due, the longer-term charts continue to improve, and we view this pullback as a multi-month buy-into-dips strategy, as prices are expected to trade higher into 2017Q2+.
With the 50% retracement of the 2014-2016 fall now reached, but not decisively broken, and stochastics very overstretched, we believe a corrective pullback is now developing.
Additonally, the Energy sector is also showing signs of weakness relative to the SPX, suggesting Hedge Funds and other 'big players' could be moving assets into more promising sectors.
However, whilst we believe a correction is due, the longer-term charts continue to improve, and we view this pullback as a multi-month buy-into-dips strategy, as prices are expected to trade higher into 2017Q2+.
