XLE and XOP underperforming

Sector rotation continues to be apparent (if you have Bloomberg and use the RRG function the chart lines look like the swirling winds of a tornado). Running through charts of the S&P sectors again to see what is strong and what is weak, there are a few standouts that continue to trade above their 50day moving average, like XLP, and 2 glaring underperformers -- XOP and XLE.

Since the selloff has scared some market participants who may be looking for positions to lighten up on, or to short,  I thought I would focus more on the weak sectors mentioned above and include charts of both below.  As you can see both sector ETFs are trading below all 3 of their daily major moving averages (50, 100, & 200) with the 200day being the lowest and currently the most important inflection point.  Granted, they are short term oversold and close to a possible countertrend bounce, but expect that bounce to be met by the same sellers that drove them down after breaking below the 50day moving averages. When that bounce happens, these will be prime sectors to look for selling opportunities...such as those mentioned recently like SLB and OXY, as well as others that bounce on below average volume. Long sellers and short sellers will also emerge in these sectors if they make a lower low on above average volume. That price action will likely cause further selling pressure down to their next area of support which is near $65 XLE and near $50 XOP.

Have a great weekend!