Energy has been an outperforming sector this year. The Energy Select Sector SPDR exchange-traded fund (XLE) is one of the popular ETFs to get exposure to this sector.
Crude oil prices have retreated in recent days and several equity names have pulled back from their recent highs. Let's drill into some charts to see if we are getting nervous about a normal correction of whether we are looking at something more serious.
In this daily bar chart of the XLE, below, we can see some slippage in our indicators. Prices made a slight new high in November but trading volume did not increase. The On-Balance-Volume (OBV) line looks like it equaled the June high and thus has made a bearish divergence. The Moving Average Convergence Divergence (MACD) oscillator has equaled its June high and has crossed to the downside for a take profit sell signal.