Leaders Lead:

The energy group basically went wire to wire being the best performing major S&P sector in 2021, and its stamina seems unrelenting in 2022 thus far. YTD the XLE is the only group in the green, up 22%, and its nearest competitor in the financials via the XLF is lower by 2%. Wednesday the ETF was the only major S&P sector to gain ground higher by more than 1%, and perhaps the old school correlation is alive and well as consumer discretionary was the worst behaved off more than 3% (these groups were always thought to have acted in an inverse manner to themselves as the textbooks taught us but we know they are best used for kindling in the fireplace). Below we decided to take a look at the more diverse cousin of the XLE in the XOP versus the S&P 500. Even it which has gained “just”13% in 2022 compared to the XLE’s advance of 21% thus far is soundly outshining the most followed benchmark. I like to say trends in motion are more likely to remain in place than to reverse so expect energy to lead the way higher for the foreseeable future.

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