Are Energy Stocks Indicating Long-Term Strength?

Energy stocks spent the decade of 2010 to 2020 mired in weakness, but is that trend coming to an end?

The past two years have seen the Energy Select Sector ETF (NYSE:) surge as rallied back over $80.

Today’s chart is a long-term weekly ratio chart of the Energy Sector to SPDR S&P 500 (NYSE:). And this chart may illustrate why energy stocks may be ready to out-perform in the weeks/months/years ahead.

XLE/SPY Weekly Chart

XLE/SPY Weekly Chart

As you can see, the XLE/SPY ratio formed a strong bottoming pattern over the past 24 months. And now the ratio is breaking out to new two-year highs at (1).

It looks like energy stocks are suggesting long-term strength is starting. Stay tuned.

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