Energy Fizzling?
Monday the Energy sector lost its grip as the best acting major S&P group on a YTD basis. Real Estate is now breathing right down its neck as well. Of course, we know that the XLE is heavily weighted in its top two components in XOM and CVX that account for 45% of the fund. Both of these names sport hefty dividend yields of more than 5 and 6%, although from a chart perspective I prefer CVX as it finds comfort near the very round par number and is acting slightly better now 11% off most recent 52 week highs, while XOM is 14% off its peak made in late June. The XLE has CLOSED extraordinarily tight the last 3 weeks all within just .12 of each other and we know very powerful moves tend to follow this type of coiling action. Weakness in the space is nothing new, even with its elevated status of the YTD standings below. On a 1 and 3 month time period it is the worst behaved major S&P sector and on a 6-month time frame, it is the 2nd softest, 10th of 11. Trends, a down one here, tend to last longer than we think. Energy bulls could point to future strength with Middle East strife back after the fall of Afghanistan.