The energy equity sector as measured by XLE (Energy Select Sector SPDR, Expense Ratio 0.18%) has exhibited impressive relative strength in 2013, outpacing the S&P 500 Index by more than 200 basis points, but it remains a severe laggard compared to the broad market index in the trailing one and five year periods, just marginally in the black in fact in the trailing five year.
However, surging recently largely on strength in number two component CVX (14.95% of the index), the sector has had a strong first two months of the year.
Number one component in XLE, Exxon Mobil (XOM, 18.01%), not solely as a function of its stock price rising, but also AAPL’s stock precipitously falling, has seen its weighting in the S&P 500 Index rise to 3.08% (still the number two component in the SPX) with AAPL’s top ranked weighting being reduced to 3.18% (recall it had a 4 handle for much of 2012).
Market observers have also noted the obvious linkage between the run up in Crude Oil prices that began in mid-December of last year before stalling this week, and diversified and specialized energy companies that would stand to profit in an atmosphere of high crud prices.
In fact, it will be interesting to see how crude prices hold up at these levels (USO is trading at its 200 day MA for instance) and how linked equities will react to any additional potential weakness.
XLE has been trading above average volume recently and has reeled in about $53 million in recent sessions, (which is a small amount for this particular fund) and we would expect related ETFs to potentially be in play on any additional leg up in the sector in the near term.
Other ETFs of interest include VDE (Vanguard Energy, Expense Ratio 0.14%), OIH (Market Vectors Oil Services, Expense Ratio 0.35%), IYE (iShares DJ U.S. Energy Sector, Expense Ratio 0.48%), IXC (iShares S&P Global Energy, Expense Ratio 0.48%), and XOP (SPDR S&P Oil & Gas Exploration/Production) to name a few.
Energy Select Sector SPDR
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