Energy Building:
The energy sector as measured by the XLE is continuing its nascent rally and over the last one-week period is the third best-performing major S&P sector out of 11 higher by 2.4%. Over the last month, it is the second best, and in 2024 thus far it has advanced by 6% making it the sixth best actor. The group is not for those with an easy stomach as for the last 10 years the group has been either the best, second best, worst, or second worst. Of course, no one knows if this space will keep moving higher, but the XLE has momentum and is looking for its 5th straight WEEKLY gain, a feat last achieved during the summer of 2023. The chart below of the XOP, a more equal-weighted fund shows the ETF just above a double-bottom pivot and we know the best breakouts tend to work right away so bulls want to see this continue its gradual and steady uptrend. The ratio chart comparing the two shows the big heavyweights are still dominating, in favor of the XLE. Optimism rides on the fact that M&A activity has come alive, albeit at weak premiums, but if Chinese markets start to bottom this could give a lift to the sector too. As always for technicians it is a show-me world and PRICE action going forward will give us most of the answers.