“Last inflated man standing” feels a bit of heat [w/ edit]

[edit] And so a perfectly good topping situation is wrecked. Or is it? Today’s chart would show the potential for a reverse Symmetrical Triangle topping/reversal pattern. But it would also show potential to ding a new high before topping. Regardless, my outstanding profit is now a minuscule one and I’ve taken it on half the position and probably will on the remainder. I generally don’t have the psych makeup for shorting and should learn to grab short side profits when presented. Pisses me off, actually, even though it’s a good day overall.

The Energy sector has been due for a pullback and this morning it is cracking initial support

As noted in a November 16th post, the Energy sector is vulnerable. For much of 2022 I’ve been calling the Energy sector “the last inflated man standing”. Another theme we have is for inflationist froggies, so stout and assured since the inflation trades became obvious to even the public and the eggheaded officials at the Fed, to gently have the heat turned up on them in a pot on the stove.

In the public post linked above (I shorted energy the day that post was made and it is by a significant margin my largest non-cash/equiv. position) we combined some counter-cyclical data for Energy stocks with the overbought chart of XLE. Here is the updated chart. XLE is taking out the daily EMA 20 and if that holds the next target is the SMA 50 and the 50% Fib retrace area. Beyond that, if a correction manifests and is a hearty one the area of the 62% Fib and SMA 200 would be next. If that happens, might as well fill the lower gap.

Many gold bugs are oil/energy bugs and that makes little sense. At least if said gold bugs are also gold stock bugs. #nonsensical

XLE, energy sector (oil and gas)

Another clip from NFTRH 732

The Energy sector is trending up and bullish. I shorted it last week (ERY) per the trade log, while not recommending that for anyone else because a) cash is paying income and b) it’s an Energy bull market (by definition of the same trend markers that define SPX above in a bear market).

 

The reason I am short is because I feel that enough is enough for now with this sector that sees its products (oil & gas) in full correction mode and YoY earnings comps due (IMO) to start fading in the coming months. Also, I wanted to be short a sector that seems at higher risk as I collect items (like gold miners and Biotech), that are at lower risk. If lucky enough to get a gap fill around 73 I very probably would cover the short (sell ERY) if I have not already done so, at such time.

xle, energy sector (oil and gas)

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