After crashing from mid-2014 through early 2015, oil and oil stocks finally stopped going down and really formed a nice base over the last few months. Over the last few weeks, however, we’ve seen prices in this area of the market plummet once again. Oil is down 8%+ today for its biggest one-day decline since early February. As shown in the chart below, the commodity (black line) has now given up a significant chunk of its second quarter rally off of its lows.
The XLE Energy sector ETF rallied 13% or so from its lows in late January to its high in early May. Since peaking out a couple months ago, though, XLE has been heading straight down, and it’s quickly approaching a new 52-week low. We’ll likely see an attempt to hold the lows if they’re tested this week, but right now there’s significant selling pressure in the sector. A break to new lows would likely trigger another round of technical selling, and there’s not a lot of support in sight.
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