Don't Ignore This Chart!

Oil & Gas Equip & Services SPDR Breaks Wedge and Underperforms

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The Oil & Gas Equip & Services SPDR (XES) looks vulnerable because the bigger trend is down and the ETF just broke a wedge trend line. The chart shows the 50-day EMA (green) below the 200-day EMA (red) and this suggests that a long-term downtrend remains underway. The ETF got a bounce in August, but a rising wedge formed and XES broke the wedge trend line with a decline the last three days. This reverses the short-term upswing and signals a continuation of the bigger downtrend. The indicator window shows MACD flattening out just above the zero line. A downturn and move below the signal line would be bearish for momentum. And finally, notice that the XES:SPY ratio peaked in early June and XES has underperformed the broader market the last two months. 

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--Arthur Hill CMT

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Announcement from the Author

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Arthur Hill
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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