Oil and Energy SPDRs Receive Bearish Signals
The oil industry and the various other energy industries associated with oil production have been on really nice rallies over the last two months. The gains seemed to be propelled by vaccine news and the hope that the world economy would get back on track sooner than thought.
The Energy Select Sector SPDR (XLE) gained 56% from its October low to its high a few weeks ago. The fund quickly shifted from oversold to overbought and it moved above its 52-week moving average during the rally. Unfortunately the weekly stochastic readings made a bearish crossover last week and appear as though they may be headed out of overbought territory—a possible bearish signal.
The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) experienced an even greater gain, rallying 66.9% from its October low to its high two weeks ago. The XOP also saw its oscillators move from oversold territory to overbought territory during the rally and it also moved above its 52-week moving average. In this case the fund hadn’t been above the moving average in over two years.
Like the XLE, the XOP saw its weekly stochastic indicators make a bearish crossover while in overbought territory. We see similar instances in June and January of this year and back in April 2019. In all three of these previous instances, the XOP dropped considerably in the months that followed. The same pattern can be seen on the XLE weekly chart.
I imagine if you went through the weekly charts of the stocks that are holdings in these funds you would see a number of them following the same pattern.
Looking at the Tickeron Screener, 24 of the 26 stocks in the XLE are rated as a “sell” on the Tickeron Scorecard with only one “buy” and one “hold” rating. In the XOP, 35 of 42 receive a scorecard rating of a “sell” while five are rated as a “buy” and two have “hold” ratings.
If we look at the fundamental and technical indicators for the two funds, the XLE has one negative and one positive indicator on the fundamental side. On the technical side it gets two positive indications, but five bearish ones. The XOP doesn’t have any positive indicators from the fundamentals and it has one negative. On the technical side it has two bullish signals and four bearish signals.
The Tickeron comparison between the two ETFs shows how each fund ranks against one another and against other funds. We also see that there have been a number of signals generated on the funds in recent weeks.
XLE's RSI Oscillator leaves overbought zone
The 10-day RSI Oscillator for XLE moved out of overbought territory on October 08, 2024. This could be a sign that the stock is shifting from an upward trend to a downward trend. Traders may want to look at selling the stock or buying put options. Tickeron's A.I.dvisor looked at 40 instances where the indicator moved out of the overbought zone. In of the 40 cases the stock moved lower in the days that followed. This puts the odds of a move down at .
Technical Analysis (Indicators)
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on October 15, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on XLE as a result. In of 95 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for XLE turned negative on October 16, 2024. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 43 similar instances when the indicator turned negative. In of the 43 cases the stock turned lower in the days that followed. This puts the odds of success at .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where XLE declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
XLE broke above its upper Bollinger Band on October 03, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
Bullish Trend Analysis
The Stochastic Oscillator shows that the ticker has stayed in the oversold zone for 7 days. The price of this ticker is presumed to bounce back soon, since the longer the ticker stays in the oversold zone, the more promptly an upward trend is expected.
XLE moved above its 50-day moving average on October 01, 2024 date and that indicates a change from a downward trend to an upward trend.
The 10-day moving average for XLE crossed bullishly above the 50-day moving average on October 03, 2024. This indicates that the trend has shifted higher and could be considered a buy signal. In of 15 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where XLE advanced for three days, in of 347 cases, the price rose further within the following month. The odds of a continued upward trend are .
The Aroon Indicator entered an Uptrend today. In of 303 cases where XLE Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
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