Trading Idea: - Is Energy Select Sector SPDR close to Resistance?

Published on Tuesday, 10 July 2012 08:56 Written by TradersHuddle Wire

New York, July 10th (TradersHuddle.com) - Shares of Energy Select Sector SPDR (NYSE:XLE) are trading very close to calculated resistance at $68.70. The stock ended the trading session at just $65.99, which is near levels that make it difficult to buy or start a position.

Energy Select Sector SPDR (NYSE:XLE) is an ETF that seeks to provide investment results that correspond to the price and yield performance of the Energy Select Sector of the S&P 500 Index. Energy companies in the Index primarily develop and produce crude oil and natural gas, and provide drilling and other energy-related services. The Fund utilizes a passive or indexing investment approach to attempt to approximate the investment performance of the Index.

Energy Select Sector SPDR's stock range is defined by its calculated support defined at $61.47 and by the resistance level at $68.70; the stock is clearly over-extended from support, making it harder for participants to establish fresh longs.

Traders don't have a clear entry point for Energy Select Sector SPDR. However, as the stock pulls back towards $61.47 it will definitely provide a reference point to establish a trade. On the other hand, if the stock breaks above its resistance level at $68.70 then traders will get an opportunity to enter the stock as it moves to a higher range.