Thursday, 30 March 2017

XLE - bullish engulfing candle

Many were rattled by WTIC oil recently cooling to the low $47s. Certainly, the weakness in oil pressured energy stocks lower, but the downward trend from Dec'2016 looks likely to have concluded. The sector ETF of XLE settled the day u/c at $70.14. Things turn bullish with a break into the $71s.

XLE, weekly


A rare highlight of the sector ETF of XLE, which I'd argue is a very valid way to trade the energy sector.

XLE peaked in Dec'2016 at $77.57. The weekly candle was itself a black-fail, which are pretty rare for the bigger weekly cycles.. and are almost never seen on the giant monthly cycles.

From the Dec' high, XLE has very consistently declined, and even broke a new low of $67.86 a few days ago.

With WTIC oil back to around the $50 threshold, XLE is battling to settle the week with a very powerful bullish engulfing candle. This is the most bullish candle since at least late Oct'2016.

Things turn bullish with a break into the $71s. Once achieved, first target will be the 77/79 zone, and that is a clear 10% higher. Time frame would be within 2-3 months.

A subscriber kindly highlighted this to me today...

I'm somewhat familiar with Kimble, and I largely agree with much of the article.

Implications for the broader market

Many (myself included) have been seeking a basic 5% retrace within the main equity market. Yet, that is simply not going to be possible if the energy sector is about to push significantly higher. If you believe XLE will climb around 10% within a few months, its difficult to see how the main market will not continue to battle upward.