Conclusion, Investment Implications, Strategy

The SPDR SPDR S&P Oil & Gas Exploration & Production ETF (XOP) is in the midst of a February 15th major uptrend amid new monthly asset expansion and quarterly relative outperformance versus the benchmark S&P 500.  As long as these positive factors remain true , this sets up an emerging low-risk opportunity to buy XOP and the Energy-related assets it represents.

Current Sector & Industry Group Ideas

Table 1 below is also accessible via the Sector & Industry Group Ideas rectangle at the top of the Research Center.

Table 1

Click the table to  make it larger

This table also regularly appears in our weekly Keys To This Week: Sector & Industry Groups report published on Monday mornings.

Analysis & Investment Implications

The upper panel of Chart 1 below plots the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) daily since October 2023 with its 200-day moving average, a widely-watched major trend proxy.  The green highlights point out that XOP rose and remained above its 200-day MA on Feb 15th to indicate a major bullish trend change.

Table 1

The middle panel plots the corresponding total net assets (AUM) invested in XOP with their 21-day moving average, the latter to identify the monthly (our Tactical timeframe) trend of expansion or contraction.  The green arrow points out that these assets moved above their 21-day MA on Feb 9th to indicate a new trend of monthly expansion, and have continued to aggressively expand since then.  Expanding assets indicate investor conviction in higher prices.

The lower panel plots a corresponding chart of the daily relative performance between XOP and the S&P 500 (SPY) with its 63-day moving average, the latter to identify the quarterly (our Strategic timeframe) trend of relative outperformance or underperformance.  The green arrows highlight that XOP shifted to a new trend of Strategic relative outperformance versus SPY on Mar 13th.

Together, these metrics suggest an emerging long/overweight opportunity in XOP from a price trend, asset flows, and relative performance standpoint.