The energy stocks have wildly outperformed since we turned bullish on them in October or 2020. However, the outlook is not as rosy as we move towards the last seven months of 2023.
On the fundamental side, demand is weakening and the supply from Russia is not very constrained. On the technical side, we’re seeing an important negative development on the XLE and XOP energy stock ETFs.
This is not a bearish call…it’s a less bullish one. In fact, the stocks could see a short-term bounce at any time. However, they’ll have a tough time regaining a period of outperformance…like they were able to do after dips in 2021 and 2022.
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