The sharp correction in the energy sector continues as Crude continued to slide lower in fears of a supply glut. Sharp corrections are nothing new in this sector after reviewing the iShares Goldman Sachs Natural Resources Sector (IGE) ETF.
The 3 previous corrections in the GS (IGE) show corrections of -32.1%, -16%, and -15.6% respectively. The current correction in the fund has taken the sector down about 11%.
Naturally, we must pay attention to the technical support levels of what we own, and make sure we do not get whipsawed along the way. Some of the smaller oil services companies have suffered significant technical damage, but the major integrated oils and refiners are still above their support levels.
Here are the technical support levels for the oils in the Investor Alert portfolio:
Exxon (XOM): Support $53-56
Conoco (COP): Support $57-58
Marathon (MRO): Support $57-60
Sunoco (SUN): $65-71
Valero (VLO): $46-48
The whipsaw usually occurs when traders place stops at various support levels, then when the stops are triggered, investors get stopped out. Nothing is more frustrating then to set a stop, get stopped out, and then see the stock you just sold begin to rally once more.
Given the long term global trends in energy, I am going to be very patient before placing stops on dominant companies who provide products that have increasing demand.
