XLE (S&P Select Energy SPDR, ETF) Follows Our Technical Expectations

by Mike Paulenoff

March 18, 2024 • 6:36 AM EDT

On December 26, 2023, fellow MPTrader member FJB asked me the following question: Mike - do you feel comfortable giving some of your top sectors for next year if you have any?

This was my response:

In order of preference based on my technical setup work:

1- XLV (Healthcare)

2- XLB (Materials)

3- XLE (Energy)

4- XLI (Industrials)

5- XLF (Financials)

As of the close this past Friday, 3/15/24, YTD results showed XLV +6.58%, XLB +6.15%, XLI +7.06%, XLF +8.54%, and XLE (Energy) leading all sectors, at +9.27%.

Exactly one month after my exchange with fellow member FJB, during the afternoon trading session of January 25, 2024, I wrote the following about XLE (S&P Select Energy SPDR, ETF):

XLE exhibits a fascinating Big Picture setup that shows the March 2020 post-pandemic uptrend from 22.88 to the November 2022 high at 94.71, followed by a 13-month high-level rangebound digestion period between (roughly) 75-79 on the low side and 92.50 to 94.50 on the high side of the range. Within the range, let's notice that every decline established a higher-low. As long as the series of higher pullback lows (78.98 on 1/18/24 is the most recent coordinate) contain any resumption of selling pressure, XLE is heading for a challenge of critical nearer-term resistance from 84.60 to 86.50 that if hurdled and sustained will trigger new upside reversal signals in my work that will point t a test of the multi-month resistance zone across all of the highs since June 2022 (93.30 to 94.71)... Last in XLE is 83.04...

Fast-forward through 14 subsequent XLE updates into last Friday's (3/15/24) close, we see on my attached Daily XLE Chart that prices have followed our preferred technical script, climbing to a 5-month new high at 92.22-- a full 11% above my original January 25, 2024 heads-up, approaching the multi-month resistance zone from 93.30 to 94.71.

What's next for XLE? With NYMEX Crude Oil pushing above $80/bbl and considering the hotter-than-expected inflation data recently, is the XLE following the underlying commodity, or are the companies in the energy sector ETF deriving fundamental benefits from higher oil prices, reduced overhead, and relatively low P/Es?

How about all of the above?

Join me and MPTrader members ahead of potentially important directional oil price action that last week thrust above an $80/bbl multi-month breakout plateau, and ahead of Wednesday's Federal Reserve policy decision that could have a consequential impact on equities, bonds, and commodities. MPTrader members and I discuss our market analysis, strategies, and opportunistic, actionable technical and fundamental setups in individual stocks, sector ETFs, macro indices, commodities, precious metals, and Bitcoin throughout the entire trading day...

Mike Paulenoff is the author of 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 7-day Trial!

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