Nov 08

Oil, XLE Headed for New Highs

by Mike Paulenoff, Wed November 8th, 2006

The Energy Select SPDR (XLE) has carved out a very bullish pattern off its September lows near 50. In fact, my intermediate-term work argues that all of the action from January into September 2006 represented not a massive top but a huge, high-level bullish congestion area within an incomplete bull trend off its July 2002 low near 19.

If my work proves accurate, then the XLE is heading for new highs above 60.15 into the 62-64 target zone to finish the 2002-2006/07 uptrend. From a near-term perspective, I could be remiss in waiting for a pullback to 56.60, but the XLE is up about $2 in the past week, so I choose not to chase the upside right here, right now.

Having said that, only a break of 54 will begin to compromise my current outlook, while a decline that breaks below 53 will go a long way towards invalidating it.

Chart

Mike Paulenoff is author of www.MPTrader.com, a real-time diary of his technical analysis & trade alerts on ETFs for precious metals, energy, currencies, and an array of equity indices and sectors, including international markets, plus key ETF component stocks in sectors like technology, mining, and banking. Sign up for a Free 15-day Trial!