Is the Dam Breaking?
The energy space is seeing money flow from the formerly very robust group into technology. Last week the XLE was the worst-performing major S&P sector dropping 7% in more than double the average WEEKLY volume, undercutting its 50 WEEK SMA in the process. On a YTD basis, it is the only major sector of 11 down more than double digits, and keep in mind this is the same group that rose more than 50% in both 2021 and 2022. It certainly has a target on its back with that type of outperformance and remember once trends are in motion they are more likely to stay that way than to reverse. Inside the arena, the energy equipment names were holding up best but the OIH is now in “bear market mode” 23% from highs made just in late January. It has now recorded back-to-back double-digit WEEKLY losses as the group lost its leader. We spoke of how it was unlikely to duplicate that consecutive yearly performance in our 2/1 Energy Note and it is looking more and more likely that may be the case.