It’s Finally Time to Buy the Energy Sector

It has been a challenge to profit from the energy sector. But for the first time in over a year, it's finally in the buy zone.

The energy sector has probably been the most unloved major stock market sector since 2014.

That’s because when oil prices collapsed that year, it weighed on the entire sector, and its impacts are still lingering.

In short, it has been a challenge to profit from the energy sector.

I track the Energy Select Sector SPDR ETF (NYSE: XLE) for the price of the sector in general, and since mid-2014, the exchange-traded fund’s price has dropped more than 35%.

Granted, it rallied in 2016. 2017 has been much more challenging, with the sector in a steady decline.

Take a look:

It has been a challenge to profit from the energy sector. But for the first time in over a year, it's finally in the buy zone.

But as you can see, I have some annotations for you.

The red line and green line (without the arrow) create the channel that prices trended in all year.

But that changed about a week ago, highlighted in the circled area.

You can see that prices climbed above that long-standing trend line, and have held above it since then. This is known as a breakout, and since prices haven’t jumped sharply, it means there is plenty of upside remaining.

For the first time in over a year, the energy sector is finally in the buy zone.

Regards,

Chad Shoop, CMT
Editor, Automatic Profits Alert

 

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