Last week’s decline in Materials has been widely noted due to Gold’s breakdown. But less noticed is Energy’s decline which appears to be much weaker. Let’s examine the ten day slopegraphs of the nine S&P Sectors.
Note that Energy (using the Energy SPDR XLE) has the lowest momentum. Even lower than that of Materials (XLB). Energy’s volatility is not only higher than that of Materials but has rocketed upward. Finally note Energy exhibits the largest downward trend. Now let’s look at a daily chart of Energy.
The price has failed to hold at 75.50 which is a month’s long area of support/resistance. The price breakdown was preceded by three months of divergence between the MACD oscillator and price. Moreover support in the MACD was also broken at the point circled. Also circled are doji’s as price approached new highs. Shown at the bottom of the chart is the Bullish Percent Index. This index is a breadth indicator based on the number of bullish P&F charts across the XLE’s components. This particular signal is unambiguously bearish of bullish and note how the 50/50 line held for a few days. The current value shows that 67% of the XLE components are showing bearish signals. Next week Apple’s earning will get most of the buzz but Exxon Mobil Corp. (XOM), ConocoPhillips (COP), Chevron Corp. (CVX), Occidental Petroleum Corp. (OXY), and many others report promising to be quite an interesting week for energy.
Note also on the slopegarphs above the continued positive characteristics of the defensive sectors Utilities (XLU), Consumer Staples (XLP), and Healthcare (XLV). The XLU, XLV, and XLP exhibit the greatest positive momentum, lowest volatility , and are in fact the only sectors whose price exceeds their ten-day moving average.