ENERGY ETFs ARE BREAKING OUT ALONG WITH SEVERAL ENERGY STOCKS -- ENERGY BULLISH PERCENT INDEX GIVES BUY SIGNAL
ENERGY ETFs ARE BREAKING OUT ... Yesterday I showed the two Energy ETFs that I track closely challenging their late April highs. A late drop in the price of oil yesterday prevented an upside breakout. With oil trading a dollar higher this afternoon, it looks like the bullish breakouts are taking place today. Chart 1 shows the Energy Sector SPDR (XLE) trading over that initial resistance barrier. At the same time, the biggest stock in the XLE -- Exxon Mobil -- has risen over its 50-day average and has broken a three-month down trendline. Most other oil stocks in the XLE are doing even better. A number of its bigger stocks are close to 52-week highs including Burlington Resources and Occidental Petroleum.
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BAKER HUGHES AND NOBLE LEAD OIH HIGHER ... The Oil Service Holders (OIH) are also breaking through their late April high. That puts the 2005 highs within range. Two of the bigger stocks in the OIH have already reached new highs -- Baker Hughes and Noble. Most of the other oil service stocks are still below their 2005 peaks, but are heading in that direction.
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BPI FOR ENERGY GIVES BUY SIGNAL ... The Bullish Percent Index (BPI) is the percentage of stocks in an index that are on point & figure buy signals. The BPI for the Energy Sector is now on a buy signal. Its p&f chart shows why. Having recovered from oversold territory below 30, the last column of x's has just exceeded the previous x column at 48. That upside breakout constitutes an energy sector buy signal. The fact that the BPI has moved back above 50 is also a bullish sign. [The last green x represents today's price action]. While today's action is bullish for the energy sector, it's another thing for the market to worry about. Energy leadership may help the market temporarily (since oil stocks are rising), but it hurts it in the long run. This looks like a good time to energize one's portfolio.
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