Everyone knows, or at least should be well aware of the dominance in the XLE, which has a huge representation at the top by XOM and CVX which comprise of about 42% of the ETF. Both recently reported earnings on 11/2, and CVX doubled the advance of XOM rising 3.2% (both have dividend yield in the 4% neighborhood too). Peer BP, another oil behemoth reported numbers on 10/30 and smartly jumped 2.9%, and another 2.7% before encountering resistance at its 50 day SMA. The XLE did fill in a gap to the upside from the 10/22 session today, and a bearish death cross looks imminent as the 50 day looks poised to undercut the 200 day. The group is the worst performing of the 11 major S&P sectors on a 1, 3 and 6 month basis. Bulls however, may point to history with the quick failure of that pattern back in April (hot seen on daily chart below), that sprouted a firm 6 week winning streak that gained a total of 16%. Personally I think there are better sectors to play than this one, but on a stock by stock basis opportunities abound. Do your homework.
With the ten year treasury yield above 3.2%, it is now above the area that precipitated the October sell off. Notice however that stock markets are now well off those early October lows, with the S&P 500 has 200 handles off their 10/29 lows even as the TNX remains elevated. I mention this because their is a relationship with rates and the greenback. Capital flows to where its treated best, and the US Dollar is still where investors want to be. Below is the WEEKLY chart of the UUP, as it fell today even as rates remained firm. From a short term perspective one would see that daily chart retesting a double bottom with handle breakout trigger of 25.64 originally taken out on 10/24. On the WEEKLY chart one could see the doji candle that was recorded last week, and this week could be looking to complete a bearish evening star candle. This is important because of the intermarket relationship between oil and the dollar. They trade in an inverse fashion and the potential dollar weakness going forward could be wings behind the back of the energy space.
The energy spaces frailty recently exposed most names to severe pressure. The ones that held firm where they did should be respected. Below is the chart of GTLS and how it was profiled in our Energy Report on 10/31. It currently rests 10% off most recent 52 week highs, and notice how the round number theory came into play with two recent rejections at the 80 figure on 7/20 and 10/1 (by the way that double top can now be viewed as an add through a double bottom trigger of 79.95, if strength continues to persist). The touch of the upward sloping 200 day SMA was a good reset for bulls as it had not come into contact with the line for 13 months prior. Looking back on its weekly chart the action as of late is most likely digestion the huge move from 32 to 80 during 11 month stretch between weeks ending 8/25/17-7/20/18. More risk tolerant investors could add some with a buy stop of 72.75 as it crosses above its 50 day SMA.