Gushing Lower?
The energy group is at a critical juncture here in my opinion and the WEEKLY chart of the XOP below paints the narrative. The once-reliable WEEKLY 50 SMA has been touched a few too many times for my liking and I am one that believes the more a line is touched, the less firm that support or resistance becomes, contrary to popular technical analysis assumption. One can see the XOP never really recovered from the huge WEEKLY loss ending 6/17/22 that cratered more than 20% in huge volume. It is now 17% below that intraweek top, and compare that to the OIH which is now more than 11% above that same meaningful week last June (OIH was not spared that week drilling lower by more than 19%, pun intended). The exploration and production names continue to lag equipment with the XOP now 23% off its most recent 52-week highs, while the OIH is “just” 7% off its own annual peak. Over the last 3 months and YTD time periods, the XLE is the worst-performing major S&P sector out of 11. Quite a different story from 2022.