quick review, importance of XLE in the circle of life and sector rotation
if you go back some posts you’ll find me recommending to BUY the banks in March 2009. YES .. BUY in MARCH 2009. there was a PATTERN.
additionally, if you go back you’ll find that the XLF had cracked a couple weeks/months before THE top in 2007 but the S&P 500 kept going. It was pretty obvious that ENERGY was running this puppy and even though the XLF had started down, the XLE (crude) had taken off into a parabolic run to 147. And, after that topped the entire thing caved in.
AGAIN – THIS IS NOT PLAYING OUT RIGHT NOW. THE XLF CLOSED ABOVE OUR PATTERN LEVEL FOR THE FIRST TIME SINCE 2014. AGAIN – PATTERNS PATTERNS PATTERNS. The XLF is going up, the S&P 500 is going up AND the XLE is going up. The playbook was PERFECT from a sector rotation last time. Banks cracked (thank you) and then energy/oil ran and then cracked and then we caved, per the sector rotation model. NOTE – the first XLE target is coming into play. THIS IS THE EXACT SAME TYPE of pattern that the DJ Transports crushed. Don’t know if that means it will fail or not – but it’s the same basic pattern of an AB=CD into a 1.618 extension. A “perfect” butterfly SELL pattern on the XLE. So .. again we have a long term PATTERN on the DAX, a pattern on the XLE and a failed pattern on the XLF.
may you live in interesting times …