SHORT-TERM STOCK REBOUND CONTINUES -- ENERGY SECTOR ACHIEVES UPSIDE BREAKOUTS -- EXXON AND SCHLUMBERGER.HIT 52-WEEK HIGHS

SHORT-TERM REBOUND CONTINUES... Stocks are ending the week on a positive note and continue to show signs of having formed a short-term bottom.  The daily bars in Chart 1 show the S&P 500 building on the gains that started the previous week.   Sbort-term momentum indicators like the RSI and MACD lines are also rebounding.      The first hurdle the SPX needs to extend the rebound is its early October intra-day peak at 3806.  If that level is overcome, more substantial resistance should be evident at its early September low and its 50-day moving average (blue arrow).  This week's rebound, however, still needs to be viewed within the context of a continuing bear market.    While all eleven sectors are having a positive week, energy remains the market's strongest sector.   And it's having a good chart week.

ENERGY SECTOR HITS FOUR-MONTH HIGH... Energy has been the market's strongest sector all year.    And again this week.  The daily bars in Chart 2 show the Energy Sector SPDR (XLE) moving above its August peak to reach the highest level in four months.   That bullish breakout is another positive sign for the sector and its individual stocks.

CHEVRON AND EXXON BREAK OUT AS WELL... Chart 3 shows Chevron (CVX) also exceeding its August high to achieve an upside breakout of its own.  Exxon is having an even stronger day.  Chart 4 shows Exxon (XOM) clearing its June high to reach a new record.    Oil service stocks are also having a strong day.

SCHLUMBERGER LEADS OIH HIGHER...Oil service are also achieving upside breakouts.   Chart 5 shows the VanEck Oil Services ETF (OIH) rising to the highest level since June. It's being led higher by Schlumberger (SLB).   Chart 6 shows that oil service leader exceeding its June high to reach the highest level in four years.

ENERGY LEADERSHIP MAY BE A WARNING SIGN... Although rising energy shares are contributing to today's strong stock market gains, today's upside breakouts aren't necessarily good for the rest of the market going forward.   That's especially true if gains in energy shares are based on expectations for higher energy prices.