Suddenly energy is flying

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Energy’s gone from forgotten to en fuego quicker than you can say “missiles over Damascus.”

Crude oil (@CL) hit $67.45 this morning, its highest level in 2-1/2 years. It’s up almost 8 percent on the week, its biggest three-session rally since December 2016.

There are two obvious catalysts. First, China’s decision to lower tariffs made the market sigh in relief. Fears of a trade war quickly morphed into greed for a commodity closely associated with global growth. Then early this morning, President Trump threatened to launch missiles at Syria.

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Market Insights every day for the latest news and analysis!

For a sense of how dramatic the surge is, consider the fact that the SPDR Energy ETF (XLF) came into the session down about 3 percent on the year. It’s pretty much gone nowhere forever, even when the broader market was making new highs in January.

But this week, XLE’s 5 percent gain makes it the strongest major sector fund. Digging into the components on RadarScreen® we find that all the 31 member stocks are up since Friday’s close.

The price chart might also have something of interest for technicians because the rally places XLE firmly back above its 50-day moving average for the first time in over two months.

SPDR Energy Fund (XLE)
SPDR Energy Fund (XLE)

 

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David Russell is VP of Market Intelligence at TradeStation Group. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.