Is Energy Losing its Mojo?
Energy stocks have led the market all year, but now there are potential signs of fatigue.
This chart shows the tight ascending pattern in the
SPDR Energy ETF along with its 2018 high of $79.42. Prices attempted to move through the level this week but failed to hold. Was it a failed breakout?
Next, consider the candles above $79.42: two dojis followed by a large bearish outside day. That may be viewed as a reversal pattern. MACD has also been falling.
Third, yesterday's drop (the sharpest decline in five weeks) landed prices at the trendline that’s been support all year. Any follow-through could break the trend and trigger profit taking.
Finally, geopolitics have favored energy. But changes in the global situation could change that environment – especially with the Federal Reserve increasingly committed to slowing inflation. When lots of “good news” is priced in, it can also increase the risk of a pullback.
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This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
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Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
This chart shows the tight ascending pattern in the
SPDR Energy ETF along with its 2018 high of $79.42. Prices attempted to move through the level this week but failed to hold. Was it a failed breakout?Next, consider the candles above $79.42: two dojis followed by a large bearish outside day. That may be viewed as a reversal pattern. MACD has also been falling.
Third, yesterday's drop (the sharpest decline in five weeks) landed prices at the trendline that’s been support all year. Any follow-through could break the trend and trigger profit taking.
Finally, geopolitics have favored energy. But changes in the global situation could change that environment – especially with the Federal Reserve increasingly committed to slowing inflation. When lots of “good news” is priced in, it can also increase the risk of a pullback.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. You Can Trade, Inc. is also a wholly owned subsidiary of TradeStation Group, Inc., operating under its own brand and trademarks. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing in cryptocurrencies involves significant risks. Please click here for TradeStation Crypto’s risk disclosures on investing and trading in cryptocurrencies.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
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