Energy stocks and the exchange traded funds that hold those issues are trading lower, but they look a lot better than the broader market.
At this writing, only five of the Dow Jones Industrial Average’s 30 members are trading higher with one being Chevron (NYSE: CVX), the second largest U.S. oil company and a major holding in an array of well-known energy ETFs. Friday is not an outlier, either.
Hampered by the declines in biotechnology, Internet and other momentum stocks, the major U.S. indices have struggled since the start of March. The same cannot be said of the energy sector. Investors, lured by compelling valuations, rushing into the sector. Energy ETFs were among the leading sector funds in terms of first-quarter inflows. [Buyers Lured to Energy ETFs]
Since the start of March, the Energy Select Sector SPDR (NYSEArca: XLE), the Vanguard Energy ETF (NYSEArca: VDE) and the iShares U.S. Energy ETF (NYSEArca: IYE) are up an average of 2.5%
XLE, the largest energy ETF by assets, “scored a textbook breakout March 28 by closing above the top of a five-month trading range. It continued higher until the Federal Reserve-induced selloff on April 4, and within two days tested its breakout,” writes Michael Kahn for Barron’s.