Are Oil and Gas ETFs Staging Serious Chart Breakouts?

Print Email

If you went through 2015 and the first six weeks of 2016, the weakness in the oil and gas sector was something most investors have not seen in years. Now oil is back over $30.00 and nearing $35.00, and the charts in some of the key oil and gas stocks and their exchange trafed funds (ETFs) seem to be reaching breakout levels. The oil and gas industry, and the investment community around energy, has been dealing all day with news of the death of Aubrey McClendon. It seems that something else may be happening here on the charts.

Before investors think of the term breaking-out on a chart means a return to old highs, let’s not all get too excited just yet. The oil patch likely still faces a lot of pressure ahead. Many oil companies just simply are not profitable — even after a big bounce. Many more oil and gas workers are either going to be laid off or they are going to end up with pay cuts or see other serious changes.

24/7 Wall St. wanted to focus on the key ETFs with charts breaking out. Again, these are not charts signaling that a return to highs is coming any time soon. They are just charts with breakout patterns that have a lot of room up to the next perceived resistance level.


Another caveat: charts often fail to live up to what many technicians will tell you. And for a final caveat, many technicians look at different charts and many argue over which metrics (MACD, moving averages, RSI) should be considered. This look here just includes chart watches using former resistance and support levels and considers 50-day and 200-day moving averages. We also have included which oil and gas giants are the top holdings of each of these ETFs.

Energy Select Sector SPDR

Energy Select Sector SPDR ETF (NYSEMKT: XLE) closed up 2.5% at $59.48, in a 52-week trading range of $49.93 to $83.66. It traded just over 25 million shares and has an average daily volume of almost 29 million. The Energy Select Sector SPDR has the following top holdings: Exxon Mobil, Chevron, Schlumberger, Occidental Petroleum, Pioneer Natural Resources, EOG Resources, Valero Energy, Phillips 66, Halliburton and Kinder Morgan.

The XLE has broken above its 50-day moving average, and the 200-day moving average is up at $65.43. Resistance around $59 was former support on three different occasions since last summer.

Alerian MLP

The Alerian MLP ETF (NYSEMKT: AMLP) closed up 3.5% at $10.47, versus a 52-week range of $7.77 to $17.35. This one is without leverage in ETFs and master limited partnerships (MLPs) and, unlike many closed-end funds, does not actively allocate large amounts of its assets in private securities or in MLP-like vehicles that are not really MLPs. The Alerian MLP ETF has the following as top holdings: Energy Transfer Partners, Magellan Midstream Partners, Enterprise Products Partners, Buckeye Partners, Plains All American Pipeline, MPLX, Williams Partners  and ONEOK Partners.

The AMLP ETF has broken above the 50-day moving average by about 50 cents to $10.45, and the 200-day moving average is all the way up at $12.50. The next pivots for resistance could be hard at $11.00 and $11.50.