Below looks at the Oil Drillers (XOP)/S&P 500 Ratio over the past couple of years:
The ratio could be creating a double bottom at line (1), near the apex of a potential bullish ascending triangle at (2), as momentum is oversold and could be creating higher lows at (3).
Below looks at ETF XOP:
Drillers have had little to smile or brag about since 2014 highs, as XOP has declined nearly 65%. If XOP can breakout above resistance of the falling wedge pattern, it could become attractive to the bulls and create a counter trend rally.
If XOP breaks below support of the falling wedge would suggest that the downtrend remains in play. We like the looks of this pattern on a risk/reward basis.
The SPDR S&P Oil & Gas Exploration & Production ETF (NYSE:XOP) was unchanged in premarket trading Thursday. Year-to-date, XOP has declined -25.00%, versus a 11.48% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of Kimble Charting Solutions.