“Exploring” Possible Route Higher:

Defensive groups were at the top of the leaderboard Monday with energy, via the XLE, adding almost 2%. On a YTD basis, the group is in the doghouse down 8%, the worst major S&P sector of 11. Looking deeper inside the space both the XOP, exploration and production and the OIH, equipment, and services, are both down in 2023 8-9% thus far. Could the group be ready for a dead cat bounce? Or maybe more? The daily chart below of the XOP shows the ETF making higher lows in the last 3 months and the trend is certainly still lower, but if this fund can get back above 128 one may have to loosen its negative stance. Overall there has been some M&A in the arena with CVX acquiring PDCE, although at a soft premium, and also last month OKE is buying MMP. Speaking of dividends the XOP pays a dividend close to 4% and the OIH pays 1%. Recognizable names like PXD FANG EOG and DVN are all off more than 20% from their most recent 52-week highs (DVN by 40%), so let these names prove it to you with potential strength showing up in the XOP over the near term.

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