Here is XLE today, very bearish and at key support.
Energy sector bulls are watching closely on the short-term. I am not. That is because we still have the unresolved monthly chart target from a couple updates last year. Generally, that is per the secular bull market channel and lateral support converging at roughly 53 to 56.
Of course, at 58.56 currently, ‘risk vs. reward’ and long-term investors may already be slowly scaling in. Assuming deflation is not going to last forever (I think inflation lurks in the system), commodities like crude oil and natural gas will eventually bottom and some day, years out maybe, the Energy sector could be looked back at as having been an opportunity of a lifetime in 2016. “Dohhhh, why didn’t I buy??” would be the refrain.
This update goes to the whole list because it is really just a reminder of where I expect XLE (and the sector) to bottom. It is close. The low-mid 50’s would be a gift to a fundamental investor who thinks she knows why the energy sector has a future, fundamentally. As a chart guy, all I know is that the above is an uninterrupted bull market. So a ‘stop loss’ on the secular bull thinking could be a monthly close below 50 or so.
