Energy Foibles:
One has to put a few things into context regarding energy. It is just the 10th best major S&P sector of 11, but the XLE is still higher by nearly 14%, just over half a year into 2019. Those are respectable gains, but then one has to also acknowledge the nearly 50% weighting in the ETF by the top 3 components. Make no mistake about it, some former E&P leaders and services plays have been decimated. The energy group reminds me somewhat of healthcare, where each time the space seems to get going, it falls on its back once again. Below is the chart of the XLE and it is at a critical juncture here, nudged up against its downward sloping 200 day SMA. A move above could prove fruitful, but will it be yet another dead cat bounce?
Heavyweight Battle One Sided:
Although XOM still resides among the top 10 largest companies in the world (I believe at one time was the largest), and has a larger market cap than chief rival CVX, it is not translating into a better stock performer. Below we take a look at the ratio chart comparing CVX to XOM and one can see a glaring difference. CVX is just 3% off its most recent 52 week highs, while XOM lags trading 11% off its most recent peak. Its most recent issues with XOM, started with the 6 week losing streak the weeks ending between 4/26-5/31 that fell more than 13%. I just try to identify trends but perhaps the change in leadership from the respected Rex Tillerson has something to do with it.
Examples:
Weekly charts obviously give one a better narrative of what a chart is try to convey, of course if you have a longer term time frame. When a “cluster of evidence” comes into play, meaning 2 or more triggers are aligning with nearly the same pivot, one can be onto something. Below is a good example of that with the chart of NOV and how it appeared in our 6/25 Energy Note. The very round 20 number coincided with a bullish engulfing candle the week ending 6/21 which rose 6.6%. It is still a laggard down more than 50% from most recent 52 week highs, but currently is trading right at its downward sloping 50 day SMA. The line has been resistance since March. One can have a small dose of optimism with a couple of CLOSES above the line if it occurs.