Oil ETF Nears Another Rally

ETF Trends

The Energy Select Sector SPDR (XLE) is one of this year’s best-performing sector exchange traded funds, an anecdote that highlights the resurgence of energy stocks.

Over the past 90 days, the list of the best U.S.-focused ETFs is topped by several energy funds, including the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) . We last looked at XOP on March 24th when it closed just over $69. The $1.1 billion ETF closed over $78 on Friday. [Oil ETF Nears New Highs]

That does not mean XOP’s run is over. In fact, the equal weight ETF may have more upside in store.

“XOP recently cleared the downtrend line of the current consolidation and has since pulled back on lighter volume,” notes Deron Wagner of Morpheus Trading Group. The moving averages are all in order, with the 10-day MA above the 20-day EMA. The 20-day EMA is above the 50-day MA and both are trending higher. We look for XOP to consolidate above the rising 50-day MA before eventually breaking out.”

A breakout for XOP would mean clearing to $78.70. Some investors appear to be preparing for the ETF to do just that has $226.2 million of XOP’s $1.1 billion in assets under management have flowed into the fund since May 1st.

XOP’s 83 holdings have a median market value of $19.6 billion, which is firmly in large-cap territory but not nearly high enough to imply the ETF is dominated by the usual suspects found in cap-weighted energy funds.

XOP allocates less than 5% of its weight to integrate oil stocks. That is a positive when considering that although the Dow Jones Industrial Average touched a record high last Friday and 20 of its 30 components are higher year-to-date, Exxon Mobil (XOM) and Chevron (CVX) are two of the worst performers of that group of 20. [Stick With Energy ETFs]

XOP’s top-10 holdings include Goodrich Petroleum (GDP), Anadaro Petroleum (APC) and Sanchez Energy (SN).

SPDR S&P Oil & Gas Exploration & Production ETF

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ETF Trends editorial team contribute to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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