The smashed Stock Market, an $8 drop in Oil combined with a seasonality situation has created an exceptional opportunity. One look at the chart of the XLE Energy Select Sector Fund and you can see you'll be buying low! Whether its a new bull market or not, Institutional Advisors sees an 8 week rally from a severly oversold situation. Take a look - Robert Zurrer for Money Talks:
We reported on the upside Exhaustion Alert in the big cap oils (XLE) on January 11th, anticipating a pullback into the normal seasonal low in February with the possibility of two legs to the downside. Prices continued higher for another ten days, but with bearish divergences in the money flow oscillators. Needless to say, the break has been more than normal. Downside Capitulation Alerts have been generated as of Friday. These follow a daily Sequential 9 Buy Setup. A 40% to 50% retracement of the decline, back to the 50-day moving averages within three to six weeks would be the normal action.
Seasonally, the XLE tends to bottom around the 20th of February and rally for eight weeks (profitable 14 of the 18 years). The most reliable moves have been when the price has been oversold in the preceding weeks. This year clearly offers that set of circumstances.
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