Mega Cap Retreat?

The two heavyweights that dominate the XLE make up nearly half of the fund. Their action affects how investors look at the group and the strength or weakness of the duo may exaggerate what is going on under the surface in the sector. But the fact that they have a large influence on the space one should look for clues from the names. Below is the chart of XOM and it currently trades 7% off recent highs, while CVX is just 3% off its own annual peak. It has trade into a bearish evening star pattern and looks heavy. CVX to me sports a better chart with a bull flag in place that it is presently attempting to peek its head above. Perhaps CVX is just a better run name and looking at its WEEKLY chart the difference to me is the 3 week winning streak weeks ending between 2/25-3/11 which rose by a combined 26%. XOM during that period rose less than 10% and the week ending 3/11 rose just 1% compared to CVX’s gain of 8%. If weakness materializes in these 2 giants going forward may it offer opportunity in other smaller less followed securities? I believe so. 

This article requires a Chartsmarter membership. Please click here to join.