Below is a table with more information on the ETFs and indexes in the above chart:
Here are three key takeaways on the state of the energy sector …
• The First Trust ISE-Revere Natural Gas ETF (NYSEARCA:FCG), a natural gas exploration & production ETF, is down the most, about 29%.
• The iShares U.S. Energy ETF (NYSEARCA:IYE) is down the least because it is the most-diverse — consisting of all the industries in the energy sector (E&P, integrateds, service, equipment, refiners and pipelines).
• The Energy Select Sector SPDR ETF (NYSEARCA:XLE) has the advantage of size. That’s because the larger energy companies in this ETF are much bigger and more stable than those in some of the other ETFs. Generally these companies have more shares outstanding, which makes it harder to move them up and down than smaller stocks with fewer outstanding shares. XLE is also the largest of the energy ETFs listed, with more than $11 billion in assets.
Bottom line: The energy markets are oversold and undervalued.
Why Natural Gas Has the Kind of Chart I Like to See
Oil and natural gas — and, in turn, energy stocks and ETFs — may be close to finding a bottom. Once that happens, they aren’t out of the woods quite yet. That’s because prices then need to trade sideways for a while (i.e., “basing” ).
Below is a chart of natural gas. This is the chart we would like to see for energy stocks:
Natural stocks should be the first stocks to find a bottom and then base.