CRUDE OIL HITS ANOTHER HIGH AND NEARS TEST OF $62 -- UNITED STATES OIL FUND NEARS TEST OF SPRING 2016 HIGH -- ENERGY SPDR MAY ON THE VERGE OF A BULLISH BREAKOUT -- ENERGY/SPX RELATIVE STRENGTH RATIO REACHES HIGHEST LEVEL IN EIGHT MONTHS
UNITED STATES OIL FUND NEARS UPSIDE BREAKOUT ... Energy prices continue to rise. WTIC Light Crude Oil is trading over $61 today for the first time more than two years and is nearing a test of its spring 2015 high just over $62. Chart 1 shows the United States Oil Fund (USO) nearing a test of its spring 2016 peak. A decisive close over that previous peak would constitute a bullish breakout and would signal that the crude oil market has entered a new uptrend. Those price gains are giving a boost to energy shares which are rising on both an absolute and relative basis.
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Chart 1
ENERGY SPDR NEARS UPSIDE BREAKOUT ... Energy shares are playing catch-up with rising energy prices. The weekly bars in Chart 2 show the Energy Sector SPDR (XLE) nearing a test of its late 2016 high and a trendline drawn over its spring 2015/ late 2016 highs. An upside breakout appears imminent. Its relative strength ratio (solid line), which was was very weak last year, may be turning up as well. The daily bars in Chart 3 show the XLE/SPX ratio rising above its September high to achieve a bullish breakout of its own. That upside breakout pushes the ratio to the highest level in eight months. Energy is today's strongest sector.
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Chart 2
