Another rough day for energy stocks as a whole today. Oil E&Ps, along with oil service names performed poorly relative to the broad markets, which also had a lousy day. Bottom line, there's no point in trying to be a hero in the market right now. Unless you shorted last week, there's really no play on energy stocks. I am holding a few of the technical trades from recent weeks (HEK, MCF and REXX) but for the most part I'm largely in cash. I will remain so until I see I high volume bullish reversal in XLE, IEZ, and IEO. Until then, I will be safely on the sidelines.
Here's a quick technical look at XLE:
As you can see, XLE has clearly broken trendline support (red line) and is now in freefall. The next downside target is the $64 area, and then $62. If heck really breaks loose in Europe we could see last year's lows of $56. I don't think that will happen, but I'm not ruling it out either. At any rate, we have some fantastic buying opportunities setting up in energy names. Just be patient and let the market find some support before jumping in.
Remember, just because stocks are cheap, doesn't mean they can't get cheaper. Always use stops to protect your capital.
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