{"id":194705,"date":"2023-08-10T02:24:08","date_gmt":"2023-08-10T06:24:08","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=194705"},"modified":"2024-01-24T12:12:53","modified_gmt":"2024-01-24T17:12:53","slug":"chart-advisor-energy-brings-the-heat","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/chart-advisor-energy-brings-the-heat\/","title":{"rendered":"Chart Advisor: Energy Brings the Heat"},"content":{"rendered":"\n<p>By&nbsp;<a href=\"https:\/\/links.investopedia.com\/u\/click?_t=36ba8fa8372241d58b3bfc06997a4332&amp;_m=0b7f86bd1e8b4b458143568b2f4df15a&amp;_e=uO6Z7XqLZZE1a37Rugy29NoekoCZe2w3sjdDSkyBvaeAyMAbDHUezAU2LjY4FDcB6KOzetjSBssUoJ4uqiUSWAkpxW-YE0c0BvI0mkJUMdPiFOsJjwl8tyij6SSz6pQtpYJ5_btHsqOyzv_oeaRju0MckNxELiooCORg7ZnUJzlFWF_IyVYQEkYf0Ro5DgjTDbW1OMg0NOosufUHgkCceN_hLLq9KMRL2iCj6UHSn_ipAVTDbpmD7j6Zrcgs5QWbQO9QJezNG3GASUrBgC0ETaVSpfyWlCuo6eJj2JtpkdaJb43iBNRRNI2IV7a9ns-XKiheoDoizy_uVdXAQ2PkHwBr9GL467ZachlBTCy-qSukMPgwBmW-ekyNKQoB_fuDfGoXuwnKIotMK2lPJkj1NnHsiSRSAH4KbnMNiJ3FDN4ZlYVAESC-EKwN--ajpHqJXi2jquOep1PMjxvxUHZOkQ%3D%3D\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>J.C. Parets<\/strong><\/a>&nbsp;&amp;&nbsp;<a href=\"https:\/\/links.investopedia.com\/u\/click?_t=36ba8fa8372241d58b3bfc06997a4332&amp;_m=0b7f86bd1e8b4b458143568b2f4df15a&amp;_e=uO6Z7XqLZZE1a37Rugy29EQlpFdcKOCSVsx5I67V25CeeYsqnknfX7Am7sTJTACz_CEVnbJjsCxDd0idgklh2oY_9EpbTAS-dspCtZlmA4DWN5dgvvAbK9bkCfShcsBSydWFY3evz0rOnIj20XT1wbVo5iZ43IW674-EsB00oEPE-yRF0JphnH7A1mQgn0MzE8R1_dWo9lJnYttN7qt4NMzZ8BEC4aBqXpyY6_IXEDZT265Flbm0C1LWjZk6ouqYEhEBZQmvTUQSpQESpWaTp1Iwz_7Js4p9-K0H4tJp1PLbAPoJu_60ujqdAlVQxoajsmIQjQdcE6jSUeBTh_HmQdbLvY67T81A9dzDH5ClJbzNlJwUIEIuX52lzZkI7Qp7IMsuaP9yAGIVFSN8TYr2HeUlzbuGBrvsAl_rL31U4xm3QvGS1cp5tPhiI-00AnE2\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>All Star Charts<\/strong><\/a><\/p>\n\n\n\n<p><strong>1\/ Crude Oil Breaks Out<\/strong><\/p>\n\n\n\n<p><strong>2\/ What Will It Be for Yields?<\/strong><\/p>\n\n\n\n<p><strong>3\/ Overhead Supply Seizes the Russell<\/strong><\/p>\n\n\n\n<p><strong>4\/ Dollar Strength Broadens<\/strong><\/p>\n\n\n\n<p><em>Investopedia is partnering with All Star Charts on this newsletter, which both sells its research to investors, and may trade or hold positions in securities mentioned herein. The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-1-crude-oil-breaks-out\">1\/ <strong>Crude Oil Breaks Out<\/strong><\/h2>\n\n\n\n<p>Energy is bringing the heat as Labor Day nears.<\/p>\n\n\n\n<p>The Energy Sector ETF (<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=xle&amp;hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9928536-20230810&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081023\" target=\"_blank\" rel=\"noreferrer noopener\">XLE<\/a>) is breaking to fresh highs. The Oil Services ETF (<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=xes&amp;hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9928536-20230810&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081023\" target=\"_blank\" rel=\"noreferrer noopener\">XES<\/a>) is printing new multi-year highs. And even the&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/c\/commodity-product-spread.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9928536-20230810&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081023\" target=\"_blank\" rel=\"noreferrer noopener\">crack spread<\/a>&nbsp;is widening as demand increases for gasoline and heating oil.<\/p>\n\n\n\n<p>But crude oil completing an eight-month&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/r\/reversal.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9928536-20230810&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081023\" target=\"_blank\" rel=\"noreferrer noopener\">reversal pattern<\/a>&nbsp;takes the cake.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/08\/1-11-1100x541.png\" alt=\"\" class=\"wp-image-194706 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/541;\" \/><\/figure>\n\n\n\n<p>Not only is crude oil breaking to fresh eight-month highs, but it\u2019s also resolving above an&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/v\/vwap.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9928536-20230810&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081023\" target=\"_blank\" rel=\"noreferrer noopener\">anchored volume-weighted average price (AVWAP)<\/a>&nbsp;anchored from the June 2022 high.<\/p>\n\n\n\n<p>The breakout above the AVWAP indicates that the bulls are now back in control of the market for the first time in over a year.<\/p>\n\n\n\n<p>This supports our bullish energy thesis and a continuation of the stock market rotation already underway.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-2-what-will-it-be-for-yields\">2\/ <strong>What Will It Be for Yields?<\/strong><\/h2>\n\n\n\n<p>When we look at&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/t\/treasury-yield.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9928536-20230810&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081023\" target=\"_blank\" rel=\"noreferrer noopener\">U.S. Treasury yields<\/a>, something is brewing.<\/p>\n\n\n\n<p>As you can see, the&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/1\/10-yeartreasury.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9928536-20230810&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081023\" target=\"_blank\" rel=\"noreferrer noopener\">U.S. 10-Year<\/a>&nbsp;yield has been consolidating in a well-defined range since it peaked in October last year.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/08\/2-7-1100x1162.png\" alt=\"\" class=\"wp-image-194707 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/1162;\" \/><\/figure>\n\n\n\n<p>We&#8217;re asking ourselves if this is a massive top carving out or a&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/c\/continuationpattern.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9928536-20230810&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081023\" target=\"_blank\" rel=\"noreferrer noopener\">continuation pattern<\/a>&nbsp;that will resolve higher in the direction of the underlying trend.<\/p>\n\n\n\n<p>We don\u2019t know the answer, but if interest rates are going higher, we could see further selling pressure for risk assets, especially in growth and tech stocks, with potential opportunities in the most&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/v\/valuestock.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9928536-20230810&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081023\" target=\"_blank\" rel=\"noreferrer noopener\">value-oriented groups<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-3-overhead-supply-seizes-the-russell\">3\/ <strong>Overhead Supply Seizes the Russell<\/strong><\/h2>\n\n\n\n<p>Sellers have taken control in the past few weeks as major U.S. indexes and sectors run into critical&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/r\/resistance.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9928536-20230810&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081023\" target=\"_blank\" rel=\"noreferrer noopener\">resistance levels<\/a>.<\/p>\n\n\n\n<p>The Russell 2000 ETF (<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=iwm&amp;hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9928536-20230810&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081023\" target=\"_blank\" rel=\"noreferrer noopener\">IWM<\/a>) illustrates this theme, as it halted its recent advance at a shelf of former highs.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/08\/3-7-1100x541.png\" alt=\"\" class=\"wp-image-194708 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/541;\" \/><\/figure>\n\n\n\n<p>This level represents the year-to-date and August highs from last year. It also coincides with the psychological barrier of $200.<\/p>\n\n\n\n<p>Momentum, as measured by the 14-period&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/d\/divergence.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9928536-20230810&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081023\" target=\"_blank\" rel=\"noreferrer noopener\">relative strength index (RSI)<\/a>, has been waning lately, indicating that the bulls are tired and need a breather. The result is a potential bearish&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/d\/divergence.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9928536-20230810&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081023\" target=\"_blank\" rel=\"noreferrer noopener\">divergence<\/a>&nbsp;as the price gets rejected at this critical level of interest.<\/p>\n\n\n\n<p>As long as the price remains below $200, we could expect sideways action for the smaller stocks in the foreseeable future.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-4-dollar-strength-broadens\">4\/ <strong>Dollar Strength Broadens<\/strong><\/h2>\n\n\n\n<p>The&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/u\/usdx.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9928536-20230810&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081023\" target=\"_blank\" rel=\"noreferrer noopener\">U.S. Dollar Index<\/a>&nbsp;(<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=dxy&amp;hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9928536-20230810&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081023\" target=\"_blank\" rel=\"noreferrer noopener\">DXY<\/a>) is the most important chart in the world, again. But honestly, when is it not?&nbsp;<\/p>\n\n\n\n<p>There\u2019s no hiding from King Dollar\u2014especially as the probability of renewed headwinds for risk assets increases with the&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/f\/failedbreak.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9928536-20230810&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081023\" target=\"_blank\" rel=\"noreferrer noopener\">failed breakdown<\/a>&nbsp;in DXY.<\/p>\n\n\n\n<p>Check out the triple-pane chart of the U.S. Dollar Index, our&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/g\/groupoften.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9928536-20230810&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081023\" target=\"_blank\" rel=\"noreferrer noopener\">G-10<\/a>&nbsp;currency index, and the U.S. dollar&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/a\/advancedeclineline.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9928536-20230810&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081023\" target=\"_blank\" rel=\"noreferrer noopener\">advance-decline (A\/D) line<\/a>:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/08\/4-6-1100x530.png\" alt=\"\" class=\"wp-image-194709 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/530;\" \/><\/figure>\n\n\n\n<p>Our U.S. dollar A\/D line went from failing to confirm the DXY breakdown last month to posting new multi-year highs this week.<\/p>\n\n\n\n<p>To be clear, the level of the advance-decline line is not as important as the trend, which is undoubtedly higher.<\/p>\n\n\n\n<p>These new highs indicate broadening&nbsp;<a href=\"https:\/\/www.investopedia.com\/articles\/forex\/051415\/pros-cons-strong-dollar.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9928536-20230810&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081023\" target=\"_blank\" rel=\"noreferrer noopener\">dollar strength<\/a>&nbsp;as more global currencies lose ground to a resurging USD.<\/p>\n\n\n\n<p>Dollar headwinds are the last obstacle stock market bulls want to deal with heading into the holidays.<\/p>\n\n\n\n<p>&#8212;<\/p>\n\n\n\n<p>Originally posted 9th August 2023<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Energy is bringing the heat as Labor Day nears. The Energy Sector ETF (XLE) is breaking to fresh highs. The Oil Services ETF (XES) is printing new multi-year highs.<\/p>\n","protected":false},"author":186,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21,14,15,16,17,18,6,9,22,23,26,3],"tags":[14275,1779,15778,208,445,6677,12993,2223],"contributors-categories":[13686],"class_list":{"0":"post-194705","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-commodities","7":"category-etfs","8":"category-fixed-income","9":"category-forex","10":"category-futures","11":"category-macro","12":"category-north-america","13":"category-securities","14":"category-stocks","15":"category-technical-analysis","16":"category-text-articles","17":"category-traders-insight","18":"tag-avwap","19":"tag-dxy","20":"tag-g-10","21":"tag-iwm","22":"tag-rsi","23":"tag-tnx","24":"tag-xes","25":"tag-xle","26":"contributors-categories-investopedia"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.5) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Chart Advisor: Energy Brings the Heat | Traders&#039; Insight<\/title>\n<meta name=\"description\" content=\"Energy is bringing the heat as Labor Day nears.The Energy Sector ETF (XLE) is breaking to fresh highs. 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