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Energy Sector Finally Becoming Bullish?

We publish this table daily to give an overview of the market, sector, and industry group indexes we follow. The Intermediate-Term Trend Model (ITTM) BUY Signals occur when the 20-day EMA crosses up through the 50-day EMA (Silver Cross). Long-Term Trend Model (LTTM) BUY Signals occur when the 50-day EMA crosses up through the 200-day EMA (Golden Cross).

Obviously, the intermediate-term status is excellent, with all but the Energy Sector on ITTM BUY Signals.

Let’s take a look at the Energy Sector chart. Energy has been in a downtrend since the September top, and it has held little promise until today, when commodities in general, and crude oil in particular, had solid rallies. It is a little early to declare victory for Energy, but it’s a good start.

Digging deeper into the technicals, we note that the Silver Cross Index (the percent of XLE components that have their 20-EMA above their 50-EMA) is very depressed and is due a turnaround. The Golden Cross Index (the percent of XLE components that have their 50-EMA above their 200-EMA) is still very strong, and should underwrite intermediate-term improvement.

Conclusion: While Energy has been poor for the last few months, it appears that rapid improvement is about to take place.

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Technical Analysis is a windsock, not a crystal ball. –Carl Swenlin

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