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Wednesday, March 1, 2017


Guest Post:  by Bginvestor

So last week, Duck offered up his long term investing (not trading) strategy..

Besides, REITS, his call is 15 to 30% in Energy.    I like rotating in/out of S&P sectors ETFs in my 401k, so let’s look at XLE (energy ETF).

Spooler alert….  XLE is looking good. 

The Weekly chart suggests  a long term up trend in a well defined channel.  Price bounced hard from the bottom of the channel (Jan 2016) to a perfect  61.8% fib level reached late last year.   Since,  price has been digesting the move.

On the daily chart, price seems to be responsive to the drawn support line.  Price is approaching the 200 DMA and has successfully reached the 61.8% fib;  all good indications that a bottom may be near..

The rotation plot suggests XLE might be just a tad bit early.. XLE is compared to XLU,XLP,XLV which I recently sold for profits.  Keep in mind that the rotation plot is relative to SPX, which shows XLE in the lagging quadrant, but will eventually move up to the “improving” quadrant  like XLU, XLP, XLV.  When ETFs hit the “improving” quadrant,  the bottom has already formed.   When XLE turns up from “lagging” to “improving” , momentum is increasing .   I expect the turn up in the lagging quadrant to happen within the next week or so (buy opportunity for me). 

From a cycle’s analysis perspective, we are at a potential ICL (intermediate cycle low).   An ICL will be made if price exceeds ~72.5 and breaks the blue trend line.  You will have to just trust me on the 29 week count.. ;)  A starting of a new cycle starts at a cycle low to a pivot high.  In addition, this cycle has been a little stretched, so an ICL is expected soon.  The highlight blue area shows the intermediate cycle which is right translated (up trending).  ICL is not confirmed yet, but has a good setup right now.

Note: Weekly charts are used for intermediate cycles.   Several daily cycles make up an intermediate cycle.   An ICL is considered a great buy entry. 
In summary, I like and am already trading this ETF.. 

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