Looks like prices are heading down to major support on the Oil Services Sector Exchange Trade Fund, ticker code XLE. The funds top 10 holdings include Exxon, Chevron, ConocoPhillips etc (see here for more detailed info on XLE). 80% of the constituents are in oil & gas, with 20% energy equipment and services
Reasons
Purely technical
Market is heading towards the 200 day moving average and the support levels basis the old spring highs
Click on the chart below to blow it up
The market bounced sharply at the end of last week with a low around 45.00. Major support comes in at around 44.80.
We wouldn't be surprised if this level is tested again busting out all the early longs before putting in a strong rally. Our strategy is simple, do nothing until last week's low is tested and it hits 44.80 or below. Then all things being equal look to enter on the long side with a tight stop.
If this pans out it could offer an excellent risk/reward.
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