Last week the Energy Select Sector SPDR Fund (XLE) broke out above its 200-week simple moving average for the first time since the week of June 5. 2015. The last test of this ‘reversion to the mean’ was tested was during the week of Dec. 16, 2016 when the average was $77.65. This moving average is now $73.76.
The weekly chart for crude oil is positive but overbought with oil above its five-week modified moving average of $58.16 and above its 200-week simple moving average of $57.18. The 12x3x3 weekly slow stochastic rose to 91.84 last week up from 90.00 on Dec. 29, as oil has entered the ‘inflating parabolic bubble’ territory with the reading above 90.00.
Trading Strategy: Buy weakness to my monthly value level of $56.67, and reduce holdings on strength to my annual and quarterly risky levels of $63.81 and $64.53, respectively.