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And a look at what happens after the S&P 500 rallies 15% in 6 months
Today, I’m going to do something a bit out of the ordinary for me. Talk less, chart more! Here we go.
This is the chart of an ETF that tracks the price of crude oil. It is rallying nicely of late, and while still in a trading range (at best), it has potential to go 25%-30% higher, perhaps by year-end. But that’s all just an educated guess because the “story” the oil market is telling me is incomplete. Read below for why.
XLE is the ETF that holds all of the energy stocks in the S&P 500. But 52% of it is in 3 huge diversified oil companies (XOM, CVX, COP), 2 of which I own in my 40-stock portfolio over at SungardenInvestment.com. Oil the commodity is moving up, and so are the big energy stocks. However, this chart has a longer way to go to get out of the dungeon. Its rally is earlier stage, and thus still in a “show me” status.
This ETF has some overlap in holdings with XLE, but is more focused on oil drillers. That’s the more high risk/reward part of the energy sector. And it is trying to climb out of an even deeper hole.
This reminds us that investing is forever a process, and an incremental process at that. I’ll be watching the energy sector to see if it can go from being off the map to something worthy of warming back up to from these considerably low levels.
Performance That Matters
The SPY ETF is up 15.8% year to date through Tuesday’s close, and up more than 16% the past 6 months. That puts it in the top 1/8 of all 6-month periods since SPY debuted way back in 1993. So we are way above “sea level” but not at the top of the mountain, historically speaking. Note that the equal weighted RSP and the equal weighted top 1000 stocks (EQAL) are having years that could better be described as average and poor, respectively.
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