The Natural Gas chart ripped to new highs while Gasoline dropped to new 52-week lows. Crude oil dropped below $60 but bounced slightly to close the week above. Needless to say, it is shifty sands trying to invest in the energy sector.
Looking in on Natural Gas, the FCG ETF invests in Natural Gas related stocks. The ETF is shown in the top panel. The price of Natural Gas is in the center panel. A ratio of the ETF to the price of Natural Gas is in the lower panel. The ETF recently hit 52-week lows just weeks before the price of Natural Gas surged to 52-week highs.
In the lower panel, the ratio has plummeted which suggests avoiding the Natural Gas stocks even while the gas goes on to higher highs.
Here is a similar but different setup for oil. In this case, I have not included a ratio chart. I have put a bullish percent index in the second panel. In the third panel is the XLE ETF which also included other types of energy like wind and solar. The bottom panel has a general oil and gas exploration ETF, XOP.
On this chart, I keep track of how many are above the 50-day moving average. While all of the charts are below the 50-day moving average, there is no reason to jump back in here.
While gas exploration companies may trade separately from oil companies, it would appear right now, the section is a no touch. While oil may bounce here at $60, the charts suggest there is no need to rush into the oil space or the gas space. Traders may wish to play the commodities directly instead.
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