|Bid||61.81 x 1000|
|Ask||62.18 x 1200|
|Day's Range||61.77 - 62.67|
|52 Week Range||53.36 - 79.42|
|PE Ratio (TTM)||N/A|
|Beta (3Y Monthly)||1.11|
|Expense Ratio (net)||0.13%|
To receive further updates on this Energy Select Sector SPDR ETF (NYSEARCA:XLE) trade as well as an alert when it's time to take profits, sign up for a risk-free trial of Maximum Options today. This morning I am recommending a bearish trade on the Energy Select Sector SPDR ETF (NYSEARCA:XLE). Crude oil prices are up this week, and XLE looks like it is starting to recover from December's selloff. But as I have said before, V-shaped rallies are rare. Unlike yesterday's trade, today's pick doesn't have good news to carry it through overhead resistance. InvestorPlace - Stock Market News, Stock Advice & Trading Tips ### Shrinking Supply vs. Shrinking Demand In 2018, the Organization of the Petroleum Exporting Countries (OPEC) and Russia agreed to cut production of oil going into the new year. Generally, less production means higher prices. The price of oil is up, as you can see in the chart below. Daily Chart of Crude Oil Futures -- Chart source: TradingView In the U.S., the number of rigs looking for new oil production has also dropped slightly. This means the U.S., which is now the world's top producer of oil, is slowing the growth in production. But the news isn't all positive. Chinese trade data shows the global economy is slowing down. Yesterday's small gains came after a 2% decline in prices. Cutting production may boost prices, but if the economy slows and global demand for oil decreases, we will see steeper declines. ### Retesting Before Recovering Looking at the chart of XLE, we see the shares starting a downward turn after yesterday's session. It is too soon to call this a near-term top, but XLE is at a turning point. Daily Chart of Energy Select Sector SPDR ETF (XLE) -- Chart Source: TradingView Even if XLE doesn't encounter resistance around the $62 level, there is still old support to overcome. Old support levels can act as new resistance, and before the selloff in December, XLE hovered above the $65 level. I think XLE will retest its December lows in February. Even if it does recover from decreased demand for oil, it needs to find new support before heading higher. That's why I am going to recommend a naked call option this morning. Sell to open the XLE Feb. 15th $66 call for a credit of about $0.30. Writing naked call options is a bearish position and is similar to shorting a stock, and it typically requires the use of a margin account. We are writing the call expecting that underlying shares will not trade above the $66 strike price prior to expiration. And we are hoping that the naked call option will lose value through time decay and will expire worthless at the Feb. 15 expiration. If so, we will keep the approximately $0.30 premium we collect at the start of the trade. However, one risk is that XLE could unexpectedly move up sharply. If that happens, we would need to buy back to cover and close the naked call option for a loss. The other risk if the stock moves up sharply is that the call will be assigned. This means that for every 1 call option we sold to open, we would need to buy 100 XLE shares on the open market at an unknown higher price and then sell the shares at the $66 strike price for a loss. Keep your positions small. The stop is at $66.50, meaning close the position if XLE rises above $66.50. Follow our Facebook page to receive each Trade of the Day direct to your News Feed -- and join the conversation. InvestorPlace advisor Ken Trester brings you Power Options Weekly, which delivers 5 new options trades and his latest trading advice to you each Friday. Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990. Compare Brokers The post Cuts to Production Won't Protect XLE from Falling Oil Demand appeared first on InvestorPlace.
Oil Traders: Goldman Sachs Expects a SlowdownOil pricesOn January 14, US crude oil February futures fell 2.1% and settled at $50.51 per barrel. The Energy Select Sector SPDR ETF (XLE) fell 0.2% on the same day. Until January 18, on the downside, the
Upstream Review for the Week Ending January 11 ## Upstream space has underperformed On January 4–11, the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) rose 6.2%—the second-largest gainer among major energy ETFs. A rise of 7.6% in US crude oil prices and a rise of 1.8% in natural gas last week could have helped upstream stocks rise. Last week, the S&P 500 Index (SPY) rose 2.5%, which might have caused another gain in upstream stocks. ## Other major energy ETFs * The VanEck Vectors Oil Services ETF (OIH) rose 7.8%. * The Energy Select Sector SPDR ETF (XLE) rose 3.6%. * The Alerian MLP ETF (AMLP) rose 1.9%. ## WTI spreads Last week, the price difference between WTI at Cushing versus Midland contracted by ~$0.65 per barrel. On January 10, the spread was at the lowest level since November 13. The fall in the spread might indicate a slowdown in the Permian Basin oil production since the takeaway capacity is constant. The WTI-WCS (Western Canada Select) spread contracted by more than $2 per barrel. Alberta’s production cut plan could be behind the contraction in the WTI-WCS spread. Since the plan’s announcement on December 2, the spread has contracted 67.7%. The recovery in the utilization of the Midwest Refinery Operable Capacity from last month might have contracted the gap between these two grades of oil. Last week, the LLS (Louisiana Light Sweet) crude oil versus WTI at Cushing, or the LLS-WTC spread, expanded by almost $1 near the $6.8 level. Next, we’ll discuss the top outperformers on our list of upstream players. Continue to Next Part Browse this series on Market Realist: * Part 2 - Analyzing the Top Upstream Gainers Last Week * Part 3 - Which Upstream Stocks Underperformed Last Week?
On January 16 and January 17, respectively, the EIA (U.S. Energy Information Administration) is scheduled to release oil and natural gas inventory data, which could be important short-term drivers of oil and natural gas prices.
The Zacks Analyst Blog Highlights: Energy Select Sector SPDR, iShares U.S. Home Construction, iShares Dow Jones Transportation and Financial Select Sector
Kinder Morgan Is Expected to Report Higher Q4 Earnings (Continued from Prior Part) ## Kinder Morgan stock So far, Kinder Morgan (KMI) stock has risen ~12% in 2019. Kinder Morgan has risen more compared to the 3% rise in the broader markets and an 8% rise in the Energy Select Sector SPDR ETF (XLE). In the last 12 months, Kinder Morgan fell ~9%. XLE fell 17%, while the SPDR S&P 500 ETF fell ~6% during the same period. Strong fourth-quarter results might boost Kinder Morgan stock. The above graph compares the performance of Kinder Morgan stock with its peers over the last 12 months. Enterprise Products Partners (EPD) fell 4%, while ONEOK (OKE) rose 5% during this period. ## Kinder Morgan’s yield Kinder Morgan is trading at a yield of ~4.6%. Enterprise Products Partners is trading at a yield of ~6.4%, while ONEOK is offering a yield of ~5.7%. Williams Companies (WMB) is trading at a yield of ~5.4%. So, Kinder Morgan’s yield is on the lower side compared to its peers. Kinder Morgan expects to increase its dividends 25% in 2019—compared to 2018. ## 2019 guidance Kinder Morgan expects its distributable cash flow to increase 10% in 2019—compared to 2018. Kinder Morgan’s Elba liquefaction project and the Gulf Coast Express project are expected to contribute to its earnings in 2019. The company expects to spend $3.1 billion on growth projects, including contributions to joint ventures. Kinder Morgan targets a net debt-to-adjusted EBITDA ratio of 4.5x at the end of 2019. The ratio was at 4.6x at the end of the third quarter. Next, we’ll discuss analysts’ recommendations for Kinder Morgan before its fourth-quarter earnings. Continue to Next Part Browse this series on Market Realist: * Part 1 - Kinder Morgan: What to Expect from Its Q4 Earnings * Part 2 - Kinder Morgan’s Q4 Revenues Are Expected to Rise * Part 3 - Natural Gas Pipelines Might Drive Kinder Morgan’s Growth
Chiavarone blamed the market turmoil seen late last year on the Fed, which he said gave Wall Street mixed messages on its monetary policy. According to Chiavarone, doing nothing will translate into upside — especially for dividend stocks since they're tied so closely to rising interest rates.
What's Impacting Your Energy Portfolio Gain? (Continued from Prior Part) ## US equity indexes On January 3–10, US equity indexes had the following correlations with US crude oil February futures: * the S&P Mid-Cap 400 (IVOO): -42.1% * the S&P 500 (SPY): -42% * the Dow Jones Industrial Average (DIA): -36% These three equity indexes have exposure of ~5.1%, ~5.9%, and ~5.2% to the energy sector, respectively. The equity indexes rose 8%, 6.1%, and 5.8%, respectively, in the trailing week. US crude oil February futures rose 11.7% during this period. ## Oil’s rise and equity indexes The correlations indicate an inverse relationship between oil and these US equity indexes. However, the rise in these equity indexes because of the US-China trade talks might have caused oil prices to rise. Last month, the fall in US equity indexes made oil fall sharper. On January 3–10, the Energy Select Sector SPDR ETF (XLE) rose 7.7%—the third-largest gainer among the SPDR ETFs that break the broad market into subsectors. The rise in US equity indexes might have helped XLE’s rise, which we discussed in the previous part. During this period, the Industrial Select Sector SPDR ETF (XLI) rose 8.2%. XLI was the outperformer among sector-based SPDR ETFs. The Consumer Staples Select Sector SPDR ETF (XLP) rose 2.6%—the lowest gainer among sector-based SPDR ETFs. All of the sector-based SPDR ETFs ended in the green in the seven calendar days to January 10. Next, we’ll discuss the important price level for US crude oil next week. Continue to Next Part Browse this series on Market Realist: * Part 1 - President Trump Might End Oil’s Gain * Part 2 - Wall Street’s Sentiments Boosted Energy ETFs * Part 4 - Where US Crude Oil Might Head Next Week
On January 3—10, major energy ETFs had the following correlations with US crude oil February futures: the VanEck Vectors Oil Services ETF (OIH): -44.8% the SPDR S&P Oil & Gas Exploration & Production ETF (XOP): -43.2% the Alerian MLP ETF (AMLP): -38.2% the Energy Select Sector SPDR ETF (XLE): -22.3%
Kinder Morgan Is Expected to Report Higher Q4 Earnings (Continued from Prior Part) ## Natural gas pipelines Kinder Morgan’s (KMI) Natural Gas Pipelines segment’s EBDA (earnings before depreciation and amortization) grew 9% YoY (year-over-year) in the third quarter. The segment contributed more than half of Kinder Morgan’s earnings for the quarter. Growth projects and increased activity in the Bakken, Haynesville, Eagle Ford, and Permian basins might continue to drive the segment’s earnings growth in the fourth quarter. The Elba liquefaction project and the Gulf Coast Express Pipeline project are expected to contribute to the segment’s earnings in 2019. In the longer term, Kinder Morgan expects higher demand from the power sector, higher LNG (liquefied natural gas) exports, exports to Mexico, and demand from the petrochemical industry to drive the natural gas demand growth. The increase should benefit Kinder Morgan in the long term. ## Other segments While the NGL (natural gas liquid) prices in the fourth quarter softened compared to the third quarter, the prices rose YoY. Stronger volumes and higher prices should contribute to Kinder Morgan’s CO2 segment’s earnings in the fourth quarter. Kinder Morgan’s Products Pipelines and Terminals segments are also expected to report modest growth in their fourth-quarter earnings. The above graph shows Kinder Morgan’s segmental earnings over four years. Kinder Morgan forms ~2.9% of the Energy Select Sector SPDR ETF (XLE), which represents the S&P 500 Index’s energy sector. Next, we’ll discuss how Kinder Morgan stock performed. We’ll also discuss the company’s guidance for 2019. Continue to Next Part Browse this series on Market Realist: * Part 1 - Kinder Morgan: What to Expect from Its Q4 Earnings * Part 2 - Kinder Morgan’s Q4 Revenues Are Expected to Rise * Part 4 - Will Kinder Morgan’s Fourth-Quarter Results Support Its Stock?
Kinder Morgan Is Expected to Report Higher Q4 Earnings ## Kinder Morgan’s Q4 results Kinder Morgan (KMI) is scheduled to report its fourth-quarter results on January 16. Analysts expect its fourth-quarter EPS to be $0.26 per share—a rise of 23% YoY (year-over-year) and an 18% sequential rise from Kinder Morgan’s EPS of $0.22 in the third quarter. Kinder Morgan beat its EPS estimates in five of the last nine quarters. Kinder Morgan missed the estimates in two quarters and met the estimates in the other two quarters. The above graph shows Kinder Morgan’s EPS estimates and adjusted EPS during the last nine quarters. Kinder Morgan expects to exceed its DCF (distributable cash flow) guidance of $4.57 billion for 2018. For 2019, Kinder Morgan expects 10% DCF growth compared to 2018. ## Commodity prices WTI crude oil prices averaged $60 per barrel in the fourth quarter—lower by an average of $10 per barrel compared to the third quarter. However, the prices were higher compared to an average of $55 per barrel in the same quarter the previous year. Henry Hub natural gas prices averaged $3.8 per MMBtu (million British thermal units) in the fourth quarter—compared to an average of $2.9 per MMBtu in the third quarter of 2018 and the fourth quarter of 2017. Stronger gas prices should have supported Kinder Morgan’s fourth-quarter earnings. Plains All American Pipeline (PAA) is scheduled to release its fourth-quarter results on February 5. ONEOK (OKE) is expected to report its results in the last week of February. Williams Companies (WMB) is expected to report its earnings around February 13. Kinder Morgan accounts for ~2.9% of the Energy Select Sector SPDR ETF (XLE)—an energy ETF representing the S&P 500 Index’s energy sector. Continue to Next Part Browse this series on Market Realist: * Part 2 - Kinder Morgan’s Q4 Revenues Are Expected to Rise * Part 3 - Natural Gas Pipelines Might Drive Kinder Morgan’s Growth * Part 4 - Will Kinder Morgan’s Fourth-Quarter Results Support Its Stock?
While the markets have remained in the green for the last few days, they are getting spooked on renewed China slowdown fears. The latest data out of China (FXI) that’s fueling these fears is inflation data.
Most of Gundlach’s 2018 Calls Were Spot On—What about 2019? ## Assessing Gundlach’s predictions So-called bond king Jeffrey Gundlach, who is also the CEO of DoubleLine Capital, made his predictions for 2019 on a variety of topics, including debt markets, stock markets, Bitcoin, the state of the economy, and interest rates, in his annual “Just Markets” webcast on January 8. Before we look at what Gundlach expects for the year ahead, let’s have a look at what he predicted last year and how many of those predictions actually came true. ## Stock markets to turn negative One of Gundlach’s key calls for 2018 was that the equity market would end the year in negative territory. He said it would be completely different from what we experienced in 2017 and that it was payback time. In December 2018, Gundlach said, “I’m pretty sure this is a bear market.” He also said he expected the S&P 500 to fall below the lows it hit early in 2018. These predictions came true, and December turned out to be the worst December for markets since 1931. The S&P 500 (SPY), the Dow Jones Industrial Average (DIA), and the NASDAQ Composite Index (QQQ) fell 6.3%, 5.7%, and 1%, respectively, in 2018. Gundlach was also right about emerging market equities (EEM). He suggested that it isn’t a good time for traders to be buying them, but long-term investors might benefit. The MSCI Emerging Markets Index fared much worse than US markets. In April, Gundlach described Bitcoin as the current dot-com bubble. He also said that Bitcoin had rallied and peaked in 2017 along with equity prices. Bitcoin prices have been mostly falling since peaking in December 2017. ## Some misses However, Gundlach wasn’t right on all his predictions. His expectations regarding a big downside in the US dollar (UUP) didn’t come true. Moreover, he was very bullish on commodities (XME) (XLE) and even said, “What I mean by massive is not a 30% gain, it is 100%, 200% or even 400%.” This prediction also didn’t come true, with most commodities providing negative returns for the year. With the above information as our context, let’s see what Gundlach is predicting for the economy and the markets in 2019. Continue to Next Part Browse this series on Market Realist: * Part 2 - Jeffrey Gundlach: How to Survive the Market Zigzags in 2019 * Part 3 - Gundlach: Junk Bond Market Is Flashing Yellow on Recession * Part 4 - Why Gundlach Expects a Wave of Corporate Downgrades to Come
Will Natural Gas Stay above $3? (Continued from Prior Part) ## Inventories spread and natural gas prices In the week ending December 28, the inventories spread was -17.2%. The inventories spread is the difference between natural gas inventories and their five-year average. During this period, the inventories spread contracted by two percentage points compared to the previous week. On January 4, the EIA reported the natural gas inventory data for the week ending on December 28. ## Natural gas inventories The natural gas price is usually inversely related to the inventories spread. However, the relationship seems to be more biased toward a price downside when inventories rise above the five-year average. The market might be confident about having enough future supply instead of being concerned about demand getting out of hand. Since January 4, the natural gas February futures have fallen 2.5%. During the same period, natural-gas-weighted stocks Southwestern Energy (SWN), Gulfport Energy (GPOR), Range Resources (RRC), and Antero Resources (AR) rose 5.4%, 4.9%, 2.9%, and 2.1%, respectively, and underperformed their peers. The remaining natural-gas-weighted stocks ended in the green in this period. Between January 4 and January 8, the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and the Energy Select Sector SPDR ETF (XLE) rose 4.4% and ~2.3%, respectively. These ETFs hold natural gas producer stocks. ## Required fall in inventories On January 10, the EIA is scheduled to release its natural gas inventory report for the week ending on January 4. Any fall by more than ~140 billion cubic feet could cause the inventories to expand more into the negative territory, but Reuters analysts expect a draw of just 95 Bcf, which might not be a positive development for natural gas prices. Continue to Next Part Browse this series on Market Realist: * Part 1 - Will Natural Gas Stay above $3? * Part 2 - Steady Natural Gas Rig Count Might Be Trouble for Prices * Part 4 - Natural Gas Futures Spread Is Showing Interesting Divergence
The natural gas rig count was at 198 last week, which was unchanged from the previous week and just two less than the highest level in 2018 since September 2015. The natural gas rig count has fallen ~87.7% from its record level of 1,606 in 2008.
Will Oil Shift to a Higher Gear? ## Oil prices On January 7, US crude oil February futures rose 1.2% and settled at $48.52 per barrel—the highest closing level for active US crude oil futures since December 17. The Energy Select Sector SPDR ETF (XLE) rose 1.5% on the same day. Until January 11, the closing level of $50.26 would be important for US crude oil. ## Will oil shift to a higher gear? The S&P 500 Index (SPY) and the Dow Jones Industrial Average Index (DIA) rose 0.7% and 0.4%, respectively, on January 7. The recovery in equity indexes might have helped US crude oil to rise 6.8% in the trailing week. In the last month, equity indexes’ decline has made oil’s decline sharper. Another rise in US equity indexes, with the ongoing dialogue between the US and China about the trade war, might help oil shift to a higher gear. On the supply side, OPEC’s supply cuts in 2019 might be a turning point for oil prices. The fall in Iran and Venezuela’s oil exports along with the sign of a slowdown in US oil production growth might support oil. However, the inventory at 8% above the five-year average with no sign of a reduction from this level anytime soon could still be a problem for oil prices, which we’ll discuss in Part 3. ## US crude oil is below key moving averages On January 7, US crude oil futures were 10.5%, 22%, and 25.6% below their 50-day, 100-day, and 200-day moving averages, respectively. On the same day, US crude oil prices moved above their 20-day moving average—the first time since October 11. US crude oil prices being above the short-term moving averages indicates short-term momentum in oil. US crude oil futures’ 50-day moving average fell below the 200-day moving average on November 26. Since then, the difference has been widening. In technical terms, the crossover is called a “death cross.” Usually, the crossover is followed by more weakness. The crossover might pressure oil prices. Continue to Next Part Browse this series on Market Realist: * Part 2 - US Oil Production Growth Might Be Slower in 2019 * Part 3 - Falling Inventories Didn’t Help Oil’s Rise * Part 4 - Futures Spread: Less Bearish Sentiments for Oil?
Shares of Chesapeake Energy Corp. surged 2.5% in premarket trade Wednesday, after the oil and gas company provided a fourth-quarter production outlook that was above expectations. The company said it estimates production for the latest quarter of 462,000 to 464,000 barrels of oil equivalent (BOE) per day, compared with the FactSet consensus of 448,000 BOE per day. Oil production is estimated to range from 86,000 to 87,000 barrels of oil per day, above the FactSet consensus of 85,200. Separately, the company said it reduced total debt by about $1.8 billion since the end of 2017. For 2019, the company said it expects to cut capital expenditures by lower its rig count by 20% to an average of 14 rigs. The company is expected to report full fourth-quarter results in the second half of February. The stock has tumbled 49.7% over the past three months through Tuesday, while the SPDR Energy Select Sector ETF has dropped 21.3% and the S&P 500 has shed 10.6%.
What Happened in the Energy Sector Last Week (Continued from Prior Part) ## US equity indexes Between December 28 and January 4, US equity indexes rose—the S&P Mid-Cap 400 (IVOO), S&P 500 (SPY), and Dow Jones Industrial Average (DIA) rose 2.3%, 1.9%, and 1.6%, respectively. Energy stocks comprise 5.1%, 5.9%, and 5.2% of these indexes. ## Oil, broader market, and energy ETFs Last week, US crude oil February futures rose 5.8%, while the Energy Select Sector SPDR ETF (XLE) rose 4.9%. XLE rose the most among sector-specific SPDR ETFs. In addition to oil’s recovery, broader market indexes may have had a significant role in XLE’s rise. Equity indexes have recovered due to easing concerns of an economic slowdown. Last week, the Real Estate Select Sector SPDR (XLRE) fell 0.6%—the most among sector-specific SPDR ETFs. Most sector-specific SPDR ETFs rose last week. ## Energy ETFs Last week, major energy subsector ETFs’ performance was as follows: * The Alerian MLP ETF (AMLP) rose 9.3%. * The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) rose 8.6%. * The VanEck Vectors Oil Services ETF (OIH) rose 7.6%. * The VanEck Vectors Oil Refiners ETF (CRAK) rose 3.1%. Broader markets’ and oil prices’ rise may also have been behind these energy ETFs’ increase last week. The Brent-WTI spread expanded by $1.22, a positive development for CRAK. CRAK has a ~32.3% exposure to US refining stocks. Continue to Next Part Browse this series on Market Realist: * Part 1 - What Goldman Sachs Thinks about Oil * Part 3 - Last Week’s Top Energy Stocks * Part 4 - Oil ETFs Rose More than Oil Last Week
Shares of QEP Resources Inc. soared 42% in afternoon trade Monday, on track for the biggest one-day gain since they went public nearly nine years ago, after the oil and gas exploration company confirmed it has received a preliminary unsolicited proposal to be acquired by hedge fund Elliott Management Corp., in a deal that would value QEP at $2.07 billion. QEP said Elliott had proposed paying $8.75 in cash for each QEP share outstanding that it didn't already own, representing a 44% premium to Friday's closing price of $6.08. Elliott is QEP's 6th-largest shareholder, according to FactSet, with the latest filings indicating a stake of 11.7 million shares, or 4.9%, as of Sept. 30. QEP said it plans to review and "carefully consider" Elliott's proposal. The stock's previous biggest one-day percentage gain was 16%, on Nov. 30, 2016. Despite the stock's surge, it was still down 24.4% over the past three months, while the SPDR Energy Select Sector ETF has declined 21.2% and the S&P 500 has shed 11.4%.