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Energy ETFs Could Collapse If Oil Falls Much Further From Here

Tuesday, March 14, 2017 6:41
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From Taki Tsaklanos: If anything, the team at InvestingHaven avoids at all times to be sensational. Their focus is to be objective and report as many as possible important events that are ‘hidden’ to most investors.

That is how InvestingHaven succeeded in publishing that many spot-on market forecasts for 2017.

Last year, we saw in this crude oil price forecast that crude would face an incredibly strong resistance area between $54 and $60. InvestingHaven’s analysts wrote that energy stocks would be very bullish only if crude’s resistance area would be broken to the upside.

However, so far that scenario hasn’t materialized, and energy stocks are facing a serious breakdown threat at this point. Let’s put it differently: if energy stocks go lower from here, they would potentially enter a severe bear market, and could even collapse.

A collapse in energy stocks after they have been a market darling last year? Yes, that’s how it goes in markets. One year a leader, next year a laggard or even worse.

Let’s get things straight: if crude oil breaks down below the important $45 to $48 area and if energy stocks go lower relative to the S&P 500 (which is what below chart represents) we see energy stocks entering a bear market or even collapse.

The Energy Select Sector SPDR ETF (NYSE:XLE) fell $0.62 (-0.89%) in premarket trading Tuesday. Year-to-date, XLE has declined -7.81%, versus a 6.12% rise in the benchmark S&P 500 index during the same period.

XLE currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #9 of 38 ETFs in the Energy Equities ETFs category.

This article is brought to you courtesy of Investing Haven.

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