{"id":21851,"date":"2024-05-31T07:30:47","date_gmt":"2024-05-31T11:30:47","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=21851"},"modified":"2024-05-31T07:30:47","modified_gmt":"2024-05-31T11:30:47","slug":"its-a-little-too-early-to-buy-into-the-energy-sector","status":"publish","type":"post","link":"https:\/\/stage.jeffclarktrader.com\/market-minute\/its-a-little-too-early-to-buy-into-the-energy-sector\/","title":{"rendered":"It\u2019s a Little Too Early to Buy Into the Energy Sector"},"content":{"rendered":"

Don’t rush to buy into the energy sector just yet. Oil stocks have farther to fall.<\/p>\n

The Energy Select Sector Fund (XLE) is down nearly 6% over the past month. It is one of the worst-performing sectors for May. As a result, bargain hunters are looking to buy.<\/p>\n

But it’s too soon.<\/p>\n

Still on a Sell Signal<\/h2>\n

The Bullish Percent Index for the Energy Sector generated a sell signal in late-April when it turned lower from overbought conditions. At the time, the financial media talking heads were universally bullish on the energy sector. Oil was trading for more than $80 per barrel. And the talking heads argued that oil companies were “printing money.” They recommended buying the oil stocks.<\/p>\n

We argued the other side<\/a>. BPENER buy and sell signals have an excellent track record. So, we suggested patient investors would get a better buying opportunity a few months down the road.<\/p>\n

It has only been one month. The XLE is 6% lower. That already qualifies as a better buying opportunity. But, let’s stay patient… the opportunity is likely to get even better.<\/p>\n

Here’s an updated look at the BPENER…<\/p>\n

<\/p>\n

\"Image\"<\/p>\n

A bullish percent index (BPI) measures the percentage of stocks in a sector that are trading with bullish technical patterns. It’s designed to measure overbought and oversold conditions.<\/p>\n

An index is overbought when it registers above 80 – meaning 80% of the stocks in the sector are trading with bullish patterns. An index is oversold when it drops below 30.<\/p>\n

The blue arrows on the chart point to when the BPENER rallied above 80 and then turned lower from overbought conditions. That action generates a BPENER sell signal. Usually, it’s a good idea to avoid owning energy stocks in this situation.<\/p>\n

We’ve had three previous BPENER sell signals over the past two years. Energy stocks sold off hard following all three of those signals. The 6% decline we’ve seen in the energy sector over the past month would be the mildest of all of those declines.<\/p>\n

<\/p>\n

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Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/p><\/div>\n<\/div>\n

<\/p>\n

There’s Still Room to Fall<\/h2>\n

Notice also that following the sell signals in 2022, the BPENER dropped below 5 – meaning that only 5% of the stocks in the energy sector were trading with bullish technical patterns. The sell signal last September pushed the BPENER below 40 before it stopped declining.<\/p>\n

The BPENER closed Wednesday at 59. That’s closer to overbought than it is to oversold. It suggests that energy stocks still have plenty of room to fall farther.<\/p>\n

Traders don’t need to rush to buy into the energy sector right now. Stay patient. We’ll have a better chance to buy a few weeks from now.<\/p>\n

Best regards and good trading,<\/p>\n

\"Signature\"<\/p>\n

Jeff Clark
Editor, Market Minute<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Bargain hunters are looking to buy into the energy sector, but a better opportunity may be approaching\u2026<\/p>\n","protected":false},"author":55,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-21851","post","type-post","status-publish","format-standard","hentry","category-uncategorized","publication-market-minute","person-jeff-clark"],"acf":[],"ai_tts_audio_outdated":false,"ai_tts_legacy_post":false,"_links":{"self":[{"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/21851","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/55"}],"replies":[{"embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=21851"}],"version-history":[{"count":0,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/21851\/revisions"}],"wp:attachment":[{"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=21851"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=21851"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=21851"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=21851"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=21851"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=21851"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=21851"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}