A LONGER TERM LOOK AT OIL -- ENERGY STOCKS TESTING MAJOR TRENDLINE

A LONGER TERM LOOK AT OIL... Energy inflation is grabbing a lot of headlines these days and for good reason.    Energy prices are hitting the highest level in years.   That includes natural gas and crude oil.   Today's message will focus on the next potential upside target for oil.   The monthly bars in Chart 1 plot Light Crude Oil over the last twenty years.   Two things are most notable on the chart.   The first is that this year's rally broke a major resistance line extending back to 2008.  The second is the fact that WTIC has risen above its 2018 high to reach the highest level in seven years.   That suggests the strong probability for even higher prices.   The chart also raises the possibility for an eventual price rise to the 2013 high around $112.   That would be good for energy shares.

ENERGY SPDR TESTS MAJOR RESISTANCE LINE... Energy shares are the year's strongest part of the stock market.    And their uptrend should continue along with price of oil and other energy markets.   But there's a hurdle that they have to clear first.   The weekly bars in Chart 2 show the Energy Sector SPDR (XLE) reaching the highest level in six years and looking capable of moving higher.    The chart, however, shows prices now testing a major resistance line drawn over its  2014-2016 peaks.   That may be enough to cause some short-term profit taking.   But if and when it's exceeded, the next potential upside target for the XLE would be its 2018 peak near 65.