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Millionaire Now! by Larry NusbaumThis blog is based on the organizational principles found in my new book, "Millionaire Now! - A Financial Toolbox with Seven Steps to Wealth". |
Energy and Housing: Similar Patterns?
Posted on 10/18/2006 00:19 AM | Link | Post Comment
The only thing that can be said about XLE is that it hasn't broken down yet. But the pattern is similar to what we have seen in other leadership sectors that have fallen on hard times. Take a look at HGX, a housing sector index:
It enjoyed a tremendous advance from March 2003 until July 2005. Then it declined to its 52-week moving average in October 2005, followed by two rallies that failed to get back to old highs. In the March rally in particular the stochastics fell short of the strong rally zone above 80. These were all signals that it was losing momentum and sure enough, it finally broke down in the second quarter of 2006. (Is it showing signs of recovery? That's a topic for another day. Right now my point is how it looked before it broke down.)
Right now, XLE looks very similar to HGX when it topped out:
It enjoyed a tremendous advance from March 2003 until July 2005. Then it declined to its 52-week moving average in October 2005, followed by two rallies that failed to get back to old highs. In the March rally in particular the stochastics fell short of the strong rally zone above 80. These were all signals that it was losing momentum and sure enough, it finally broke down in the second quarter of 2006. (Is it showing signs of recovery? That's a topic for another day. Right now my point is how it looked before it broke down.)Right now, XLE looks very similar to HGX when it topped out:
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NOTE: Please click on the charts below to enlarge them if [read more]
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Hedge funds have made billions this year shorting the banks, [read more]
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