Who Wants To Be The Next Leader?

It may sound strange that we are referring to energy in the past tense, but the break last month on the XLE was severe. The MONTHLY chart recorded a long bearish engulfing candle, and it seems now that FOMO within the sector has turned into panic selling. One wants to see an “orderly” pullback into support, and the XLE has been anything but that with a 17% slump the week ending 6/17 on well above average WEEKLY volume. Oil is flirting with the very round par number, and it has been mentioned that if that cracks decisively it may open the door for other major S&P sectors to find a footing. Software has been acting well as of late and with semis recording a nice reversal perhaps technology will be ready to assume leadership status. The green shoots for “risk-on” are sprouting ever so slightly with the only 3 green sectors being discretionary, communication services, and technology. It is a good start but for it to continue I think energy has to continue to fall to see healthy capital rotation. 

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