Energy Stocks Look Different This Time

I’ve written plenty of hate mail over the past three years as energy’s failed breakouts piled up.

Hate Mail #1 and Hate Mail #2 and Hate Mail #3 are just a few of them. 

Because every rally looked promising and every one ran out of gas.

But here’s what most people miss.

Stocks don’t care if you’re tired of their failed breakouts, so neither should you.

That one time you ignore the signal because it “fooled you before” might be the time it actually gets going.

So keep executing the trades.

Regardless of how you feel.

Let’s break it down.

First, relative trend.

Yes, XLE vs. SPY has tried to turn higher before. 

That part isn’t new. 

What is new is that this time it’s actually pushing against the downtrend instead of immediately rolling over.

Second, momentum.

In downtrends, RSI rallies usually die around 60. That’s been the ceiling for years. 

This time, momentum is pushing through that level and holding. That’s a meaningful change in character.

Third, long-term support.

Price is above the 200-day moving average for the largest stretch we’ve seen in years. 

Even a pullback here would still leave room to buy, instead of forcing you to chase strength or puke weakness.

Put those three together and this move looks different. 

Different enough I might have to write an apology. 

Anyway, that’s my two cents.