by Sam Collins 03/26/08
The Energy Select Sector SPDR Fund (XLE) -- This index fund, which seeks to replicate the total return of the Energy Select Sector Index of the Standard & Poor's 500 Composite Stock Index (S&P 500 Index), has been in a bull market since late 2003. Since then, it has more than tripled.
Only recently, when oil stocks succumbed to some profit-taking, did the index fall below its 200-day moving average. It is currently trading within a triangle, with near-term support just under $70 and resistance at $76.
The stochastic indicator is now flashing a buy signal, but the overall chart formation is somewhat "toppy." And, if the XLE were to break below $63, the bull market would be over.
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'Irrational exuberance' has hit the energy markets. Be cautious about new positions in the sector.
Tuesday could have provided a pivot point as the SPX, the NASD and the DJI gave important signals.
Now under its 50-day moving average and its stochastic indicator undervalued, ENB looks like it could jump.
All eyes should be on the VIX and VXN for the buy signal (if one is to come).
AUY could break higher, but you should limit risk with a stop-loss.
