(This is an excerpt from today's DecisionPoint Alert report on DecisionPoint.com)
Today's giant drop in the Energy Sector (XLE) was enough to negate a very young Long-Term Trend Model (LTTM) BUY signal. That LTTM SELL signal was generated when the 50-EMA sunk below the 200-EMA. With oil and gas producers Exxon-Mobil (XOM), Chevron (CVX), ConocoPhillips (COP), Phillips (PSX) and Occidental Petroleum (OXY) taking up over 50% of the capitalization on XLE, I wasn't surprised to see the drop. USO dropped .75% and I'm sure this could have affected these big companies. With price dropping well below the 200-EMA, I am expecting this LT Trend Model SELL signal to remain in effect. I would look for price to drop and test the November/December lows. Notice the confirmations on all of the major indicators to the downside.
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Things were really looking up for XLE. A declining trend was broken and price had managed to overcome resistance at the 43-week EMA. The weekly PMO was just entering positive territory. Today, the PMO has topped and price dropped below both the 17/43-week EMAs. I would look for a test around $55.
Technical Analysis is a windsock, not a crystal ball.
Happy Charting! - Erin
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