Energy's down day Monday led to notable deterioration within the sector's technical indicators.
Energy commodities and stocks fell after the interim U.S.-Iran peace deal was announced Monday (6/15) with crude oil (CL/) falling 4.8%, while the State Street Energy Select Sector SDPR Fund (XLE) dropped nearly 3.5%. On the default point and figure trend chart, XLE reversed down to Os at $56 during Monday’s, placing a lower top on the chart before dropping below $55 to return the fund to a sell signal for first time last 2025. Additionally, the market relative strength chart against the S&P 500 Equal Weight Index (SPXEWI) gave an RS sell signal following Monday’s trading after having been on an RS buy signal since March. The fund still maintains a buy signal and a long-term trend, but the recent technical deterioration has brought XLE’s fund score down to the acceptable 3 level for the first time since January.
Along with XLE returning to a sell signal, the bullish percent for the sector ^BPECENERGY continued to deteriorate after reversing below 60% to finish off May and dropping below 50% during this week’s trading, suggesting that less than half of the stock’s within the sector maintain a buy signal.
Along with stocks moving to sell signals, the percentage of stocks that maintain positive near-term relative strength against the market as defined by the S&P 500 Equal Weight Index (SPXEWI) has decreased below 40%. After reversing down in April from a high mark above 80%, the stocks maintaining positive near-term RS has been cut in half and fallen down to the lowest level since May 2025. The shift in relative strength within energy has now rolled over into the long-term as well with the RSP indicator (^RSPECENERGY) reversing down into Os following Monday’s (6/15) trading. It now suggests that just over half of the stocks within the sector maintain positive long-term relative strength (an RS buy signal) against the S&P 500 Equal Weight Index (SPXEWI).
A prime example of an energy stock contributing to the aforementioned indicators’ downside is EQT Corporation (EQT). After rallying to highs in March, EQT returned to a sell signal in the latter part of the month before shifting to a negative trend on the point and figure chart and showing negative near-term relative strength against the market. The stock finished off May with a third sell signal and violation of support before falling down to the lower $50s in June. This brings the stock down to test 2026 low and support in the upper $40 to $50 range. Additionally, the stock has fallen from as high as a 4 technical attribute rating to begin April before seeing the stock drop to a 1 for 5’er with recent trading. Should recent breaks in energy equity positions cause similar technical breakdowns as shown with EQT, investors are likely looking to lighten up or step away depending on cost basis.
