The Energy Select Sector SPDR (NYSEArca: XLE) is up modestly over the past month and since Dec. 15, XLE has impressed with a gain of 9.6%.
Those superlatives should not be ignored, but they do not mean XLE and rival energy sector exchange traded funds will do much more in the near-term to foster excitement among investors. After all, XLE is still down almost 20% over the past six months, putting the ETF perilously close to the definition of bear market territory. With a 9.2% year-to-date decline, XLE is poised to be the only one of the nine sector SPDR ETFs to close 2014 in the red. [Looking for Strength Among Energy ETFs]
“XLE is i a negative eye-catcher on this RRG chart for quite a while already. From a relative perspective it is the weakest sector inside the S&P 500 universe. The JdK RS-Ratio is the lowest of all ETFs on the RRG chart and it is pointing sharply down which means that more weakness is still being added. This is reflected by a JdK RS-Momentum line below 100. The only thing that has changed over the past few weeks is that this relative momentum is flattening out which means that the pace is stabilizing which means that the trend is now down at a stable level and not at an ever increasing level,” writes Julius de Kempenaer for the RRG blog on StockCharts.com.
Other technical analysts have similarly dour views of marquee energy ETFs, including XLE’s main rival, the Vanguard Energy ETF (NYSEArca: VDE).
“After over six years of relatively sideways trading, this Energy ETF underwent a massive technical breakdown in Sep. 2014 as it violated a key long-term support level. The underperformance has been sharp as this chart clearly shows and it is also showing no signs of reversal, or even stabilization for that matter. From a price perspective, one can also see the violation of the major 2009 uptrend line. This is what one may refer to as some severe technical damage that needs to be repaired,” according to Jonathan Beck of J. Beck Investments.