Energy Sector Overview

Oil - Oil broke short-term support around the $45.50 level and is still in the downtrend that began on May 25th.  As expected there was support there because it was the low from May 4th through May 9th.  There will probably be support around the $43 level because it was the low in September and November, and then again on May 5th when the low was $43.76.  The key to a successful trade here is to wait until the downtrend line is broken. Too many investors try to catch the bottom, but the risk reward ratio is better if entry occurs once an uptrend has begun.

 

Natural Gas  - Natural Gas continues to test short-term support around the $3 level as it consolidates just above it.  This level was support in the middle of April as well.  If it breaks there will probably be a meaningful sell-off.  Longer-term, the $2.50 level has been important support.  It was the low last August, November, and again in February.  If it trades down to these levels again there will probably be significant support there.

 

XLE – S&P 500 Energy Sector ETF - The XLEs rallied after finding support around $64.50 and breaking their downtrend.  The low trade on Wednesday June 7th was $64.60.  As expected, there was support at this level because the last three times they traded down to around $64.50, during last May, June, August, and earlier this month, a rally followed.  After a small bounce, they are now approaching this level again and will probably find support.

 

XOP – S&P 500 Oil & Gas Exploration & Production ETF - The XOPs may have broken support around the $32.50 level.  There is support here because it was support during last May, June, and August.  Friday’s close was $31.65.

 

OIH – VanEck Vectors Oil Services ETF - The OIHs broke important support around the $26.50 level.  This level is important because it was support from April through November of last year and again in early May.  This level has now become resistance.  There is support around $24.50 because it was top of the range in early 2016.

 

AMLP - Alerian MLP ETF - The AMLPs have trended lower since breaking important support around the $12 level.  This level was support last June, September, November and December and now will most likely be resistance when they trade back to these levels.  They are now consolidating and testing support at the $11.50 level.  There is support at this level because it was resistance in March and April of last year, and then support last May.

 

IXC – iShares Global Energy ETF - The IXCs continue to consolidate and are testing support around the $32 level.  These levels were support in November, March, April and May.  In November and March a significant move upwards followed.

 

KOL – VanEck Vectors Coal ETF - The KOLs have been consolidating around the $12.70 level with short-term support around $12.50.  They trended lower after failing at resistance around the $14 level.  There is resistance around the $14 level because this is where they were trading in early 2015 before the large selloff began.   It was also resistance in November.

 

FAN – First Trust Global Wind Energy ETF - The FANs continue to test resistance around the $13.50 level.  This level was resistance last August and September, and in June of 2014.  Each time was followed by a significant selloff.  Friday’s close was $13.24.  If they break short-term support around $13, they may head lower because there isn’t clearly defined support until they approach the $12 level.

 

TAN – Guggenheim Solar ETF - The TANs trended higher after finding support around the $17 level in April.  This level was also support in November and February.  As expected they ran into resistance around the $19 level and have broken their uptrend.  There was resistance there because the recent highs were around $19 in early March.