Energy Sector (XLE): Odds Favor A Rally Here!

The table below looks at the performance of the major S&P 500 sectors over the past 5 years. One sector stands out… and for the wrong reason.

The Energy Sector ETF (NYSEARCA:XLE) has been a notable laggard (-1.42%). It has lagged the S&P 500 (NYSEARCA:SPY) by nearly 70% over that 5 year period.

So here’s a good question: “Is it time for them to rally?”

S&P 500 Sectors – Performance (past 5 years)


The chart below look at the Energy Sector’s (XLE) performance vs the S&P 500.  This ratio shows how deeply the sector has underperformed over the past 17-years. But looking closer at the chart, we can see that it present a nice entry for a counter-move (with a stop below point 2 – support).

Energy Sector (XLE)/S&P 500 Ratio Chart

The long-term trend is still down (lower highs and lower lows and below long-term moving averages). So if one is a trend follower, we doubt that this sector interests you.

However, if one likes to buy beaten down out-of-favor sectors with well-defined stop-loss parameters (and is willing to enforce them), then the energy sector looks interesting here.

Thanks for reading!


Twitter:  @KimbleCharting

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.


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