Week 16 Energy Trending and Performance

Tuesdays I review the Energy sector ETFs and some big stocks. We know that the price of oil has jumped over the last several few weeks. While we saw an immediate bump and I did trade the XLE and XOP for some gains, I have been out of the sector for a couple of weeks now.

I like the Energy sector because it has lower correlation with the S&P 500 than other sectors. We all remember how Energy was a good performer in 2022 when the S&P 500 and other major indexes faltered.

Here is the correlation between the S&P 500 (SPY) and other major Energy ETFs.

The first row indicates the low correlation.

Trending Heat Map

The trending is perfectly bullish for the XLE and the 2 big individual stocks XOM and SLB.

Performance

The above-mentioned low correlation can be best noticed with the 1-year returns (last column above) of SPY and XLE. The XLE is still positive at +7.69% whereas the SPY is still down -6.93%.

As mentioned above, I traded XLE and XOP to the long side couple of weeks back and then held back. I will look to continue with such short-term trades in the near future as long as the trending remains intact.