Don't Ignore This Chart!

Oil & Gas Equipment & Services SPDR Stalls after Big Surge

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The Oil & Gas Equipment & Services SPDR (XES) surged to 52-week highs in November and early December. It is clear after this surge that the bigger trend is up. First, the 40-week Slope turned positive in late July and remains positive. Second, the ETF broke out of a large triangle consolidation in late November. Third, 52-week highs happen in uptrends, not downtrends. 


XES became quite overbought after a 40+ percent surge. Overbought is not necessarily bearish, but it does increase the odds of a pullback or a consolidation. It looks like XES picked the consolidation route because the ETF stalled the last seven weeks. This stall looks like a pennant or triangle, which is typically a continuation pattern. The prior move was up and this makes it a bullish continuation pattern. Look for a break above the upper trend line to signal an end to the consolidation and a resumption of the bigger uptrend.

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--Arthur Hill CMT

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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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