Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Gold Price Trend Validation - 22nd Aug 19
Economist Lays Out the Next Step to Wonderland for the Fed - 22nd Aug 19
GCSE Exam Results Day Shock! How to Get 9 A*'s Grade 9's in England and Maths - 22nd Aug 19
KEY WEEK FOR US MARKETS, GOLD, AND OIL - Audio Analysis - 22nd Aug 19
USD/JPY, USD/CHF, GBP/USD Currency Pairs to Watch Prior to FOMC Minutes and Jackson Hole - 22nd Aug 19
Fed Too Late To Prevent US Real Estate Market Crash? - 22nd Aug 19
Retail Sector Isn’t Dead. It’s Growing and Pays 6%+ Dividends - 22nd Aug 19
FREE Access EWI's Financial Market Forecasting Service - 22nd Aug 19
Benefits of Acrobits Softphone - 22nd Aug 19
How to Protect Your Site from Bots & Spam? - 21st Aug 19
Fed Too Late To Prevent A US Housing Market Crash? - 21st Aug 19
Gold and the Cracks in the U.S., Japan and Germany’s Economic Data - 21st Aug 19
The Gold Rush of 2019 - 21st Aug 19
How to Play Interest Rates in US Real Estate - 21st Aug 19
Stocks Likely to Breakout Instead of Gold - 21st Aug 19
Top 6 Tips to Attract Followers On SoundCloud - 21st Aug 19
Holiday Nightmares - Your Caravan is Missing! - 21st Aug 19
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

Energy Stocks Sector and XLE ETF Watch

Companies / Oil Companies Apr 19, 2010 - 12:05 PM GMT

By: Mike_Paulenoff


Best Financial Markets Analysis ArticleToday we're going to discuss the energy sector. It has lagged the overall market, but it's poised to move higher based on recent technical action and Friday's close as well as geopolitics that could impact the oil industry.

After signing the new Nuclear START Treaty with Russia last week, in which Iran was the central topic of discussion, President Obama in the early part of next week is expected to urge the allies to continue pressing Iran and North Korea to abandon their nuclear programs and to seek tougher sanctions on Tehran. The tension surrounding potential Iran sanctions can, and most probably will, impact the price of oil.

Looking at the technicals, crude oil prices have gone up about 80-85% since the low in Feb 2009. A series of higher lows and higher highs took it into Oct 2009, going from under $50 to $85 a barrel, nearly doubling in price, before going sideways. In this sideways consolidation period after October (remaining between $70 and $85), crude oil was able to digest the prior gains, before turning up again in Feb in what appears to be a new upleg after the digestion period.

As long as crude oil consolidates between $87 and $82, the next likely move in crude oil will be up towards the $90 area, then possibly $100 if there’s some kind of geopolitical event.


The Energy Select Sector SPDR (XLE) also has a series of higher-lows and higher-highs in an uptrend, then a sideways channel from Oct to now that looks like it's about break out at around 60.50-.80. If that happens, we can expect the XLE to take off. If it goes to the top of the channel, which has been very well defined, it's conceivable that it's headed as high as the 68-69 level up from its current position of 59, or 15%, which is a good reason to keep the XLE on the radar screen.

Comparing the XLE to the S&P 500, the XLE is still attempting to break above its prior high, while the S&P 500 has already broken above its prior high of 1148. It’s now at 1194, which is almost 4% above it prior high.

Now we’ll look at the components of the XLE, starting with integrated components.

Energy Stocks to Watch

Exxon Mobil Corp (XOM), which is the biggest component of the XLE, is in a minor up-trend off the Feb low. However, it is lagging the overall index and could be called a relatively weak component of the XLE. It’s now approaching its 200-day exponential moving average, while the XLE and crude oil are well above their 200-day. Exxon’s 20-day moving average just crossed above the 50-day, a very important near-term technical sign because it indicates that it's in a turn, but first it will have to get above the top of its channel at 69-69 1/4, then it should be off to the races.

Where can it go? Exxon should be able to go considerably higher into the gap area left behind on its way down in Dec anywhere between 71 1/2 and 72.80.

Chevron Corp. (CVX) is a completely different picture than Exxon, much more bullish, much more constructive, a much more powerful chart. It is now climbing towards its prior rally peak after a pullback. It doesn't look like either crude oil or Exxon, but has its own particular profile. The 20 EMA is above the 50, which is above the 200. The 20 and 50 have turned up and now the 200 is turning up as well. From looking at the channel it appears it will test the 80-81 1/2 very soon and if it breaks out of that it will go to 85-86, possibly higher. This is a very constructive chart especially in comparison to Exxon Mobil. We would probably want to be more involved in CVX, although both are headed higher.

ConocoPhillips (COP) is much more bullish than either of the previous two charts. It’s in an uptrend, it went sideways between Oct and last week, but late last week it broke out and looks like it has considerably higher to move as well. The top of the channel for COP is at 60 and it’s currently at 55.30, which is a 20% upmove.

So, in terms of the integrated oil companies in order of bullishness or attractiveness, there’s COP, CVX, and XOM.

Now let's look at some non-integrated components, the oil and gas producers.

Devon Energy Corp (DVN) doesn't look like any of the components discussed so far. It is a badly lagging chart compared to the overall index. However, it does have a very impressive overall pattern of higher-lows and higher-highs since the Feb-Mar 2009 low. The chart shows an uptrend followed by a correction followed by what? Right now it's battling its averages, the convergence of its 20-, 50- and even its 200-day moving averages. The next potential up-move is at around 72 from Friday’s closing at 66-67. If it does move to 72 then there is a real potential for it to move even higher.

XTO Energy Inc. (XTO) is much better than DVN with higher-lows and higher-highs going back to 2009. If it runs to the top of the channel it has a whole lot higher to go. It's about to challenge its prior high at 49.10 from Dec 14. Should it take that out, it will be header up towards a higher target. The moving averages are pointed higher, and the consolidation of last week and pop off its 20- 50-day combination is very powerful. It looks like XTO has considerably higher to go.

Apache Corp. (APA) is natural gas and oil, and exhibits a much more powerful chart than a few of the others. It looks very much like the XLE, and is about to challenge and more than likely break out above key resistance between 107.50 and 109. Should that happen APA is going a lot higher and could accelerate towards the 120-22 level, or 10-11%. It also looks like a powerful chart and one we need to keep on our radar screen for next week.

This energy sector seemed poised to move higher. It has lagged behind the S&P 500, but there is usually a rotation going on and the Street is looking for the next candidate to go higher in that rotation and energy could be it.

Keep these charts on your radar screen this week as we will be discussing them during the week.

Sign up for a free 15-day trial to Mike's ETF & Stock Trading Diary today.

By Mike Paulenoff

Mike Paulenoff is author of (, a real-time diary of his technical analysis and trading alerts on ETFs covering metals, energy, equity indices, currencies, Treasuries, and specific industries and international regions.

© 2002-2010, an AdviceTrade publication.  All rights reserved. Any publication, distribution, retransmission or reproduction of information or data contained on this Web site without written consent from MPTrader is prohibited. See our disclaimer.

Mike Paulenoff Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules