US Energy sector bottoming vs SP500

 

 

US Energy Sector (XLE Etf ) versus SP500 chart in last 2 years

US Energy stocks bottomed early 2016 at an historic low level versus SP500 (0,025 ratio XLE/SP500) and thereafter bounced 54% in the next 11 months from USD 48 to USD 77 ( Second chart below) . Some technical elements seem to show that we might be in the same situation as early 2016  since the last 10 days or so  with XLE:SP500 ratio bouncing off from same level as in 2016, ADX indicators warning of trend change from down to up, bullish divergences on the ratio and XLE crossing the 50 days MA. Not one indicator is significative on its own but their combination might be a good signal of a trend change for Energy and a period  of catch up versus the main indices (not exclusively on US markets ) . It is good to mention that SP 500 as of end of august was up 11,74% while Energy sector was down 15,33% , a difference of more than 27% YTD and this difference amounts to 38% if we compare Energy to Tech stocks . Market might have decided it has gone to far : Tech stocks have started to correct and energy stocks to bounce.

On oil prices, big Names ( like UBS ) have oil prices targets at USD 60 (WTI oil) currently trading between USD 48 and USd 49.

Global Energy stocks I follow and that are good buys at current prices in my  opinion are amongst others Schlumberger (SLB) , Royal Dutch , Transocean (RIG) , Petrobras (PBR ) , Gazprom,…

 

US Energy Sector (XLE Etf )

General Electric : Gap closed = Bullish

 

Here below (2d chart and text), an extract of a short note sent to some contacts early august warning a bottom might be near for GE stock.

 

In the meantime GE stock traded down to exactly meet 1/ the low end of traced strong support zone (in green)  2/ the gap that market left from October 2015 at USD 24,14 (Low made at 24,15USD last thursday  )  ant thereafter strongly bounced off these lows .

GE stocks underperformed SP500by more than 30% YTD  + Heavy insider buying since July + Positive technical pattern : These 3 elements let me think stock might start to overperform SP500 and anyway would represent a defensive play in case of market correction as move down ALREADY took place here.

 

 

August 2d : “