Key Levels For Energy Bulls And Bears
In a February 3 tweet (below), we noted market participants could gain some
valuable insight into economic dynamics by keeping an eye on energy stocks
(XLE).
Thus far, energy stocks have been unable to break the 82.10 level noted two
weeks ago.
If XLE can clear the 82.10 to 84.62 barrier, and hold above that range, the
odds will improve relative to "scenario three" as described in detail on January
27.
Myth: Stocks Can't Do Well When Energy Is Weak
The point of the exercise is not to assess bullish and bearish odds for stocks,
meaning stocks can go up within the context of a weak energy sector (see table
below). The fate of energy stocks can assist us with the relative attractiveness
of inflationary assets (e.g. energy) and deflationary assets (bonds).
