Buying the Dip on Energy Select Sector SPDR?
Published on Thursday, 13 December 2012 08:42 Written by TradersHuddle Wire
New York, December 13th (TradersHuddle.com) - Shares of Energy Select Sector SPDR (NYSE:XLE) closed the session at $72.16, near the 50 day and 200 day moving averages currently set at $71.74 and $70.16 respectively. Energy Select Sector SPDR's price action is above these important levels, which could materialize into a trading opportunity.
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.
Although, the price action is above these moving averages, it's important to highlight that the 50 day moving average is currently above the 200 day moving average. This signals that the stock is not technically broken from the long side and buying the dip strategy might be the best setup to follow.
The peaks and troughs algorithm show calculated support at $67.77 and calculated resistance at $71.61. These levels should also be evaluated by traders when planning their next move, as they provide an insight into the latest price action.
If traders want to establish a position on ".$shcompname." they need to do it as close to the moving averages as possible. Also, they need to consider the latest range defined by the peaks and troughs algorithm, not forgetting that if the stock had a wild move outside its range, it could take a few days for it to establish fresh support and resistance levels.
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