This Year's Best-Performing Sector Looks Ominous Today

I hate being the bearer of bad news... But the energy sector is giving off an ominous signal right now. [Chaikin PowerFeed]( This Year's Best-Performing Sector Looks Ominous Today By Pete Carmasino, chief market strategist, Chaikin Analytics I hate being the bearer of bad news... But the energy sector is giving off an ominous signal right now. Now, before I go on, I get that this isn't the consensus view. In fact, our paid publications include several energy recommendations that are still doing well. After all, the energy sector is one of the only things working in the markets this year... The Energy Select Sector SPDR Fund (XLE) has absolutely soared. It's up roughly 48% in 2022. That's huge. And it's especially impressive when you consider that the broad market S&P 500 Index is still down around 18% this year. So I get the temptation to keep betting on energy stocks. But as investors, we also need to realize that the market won't follow the same pattern forever. And as I'll show you today, some major changes are underway in this space. Plus, you might not have noticed yet, but oil prices are already falling. And the downtrend doesn't appear to be over yet. So sure, I might be calling it early. But folks... the tides of the energy market are turning. Let's take a closer look together... Recommended Links: [This is what I'll tell the Pentagon tomorrow]( While everyone's worried about inflation, cryptocurrencies, and a looming recession, professor and forensic accountant Joel Litman plans to deliver an even more surprising warning when he meets with top military brass at the Pentagon tomorrow. [Until midnight tonight, see Joel's full warning right here](. [The EXACT Day Stocks Will Finally Bottom]( Goldman Sachs doesn't know... Bank of America doesn't know... Morningstar doesn't know... but Marc Chaikin believes he does. He called the bottom in 2020, just 24 hours before the fastest bull market in history. Now, Marc's spotted the NEXT market bottom - and he's sounding the alarm. Plus, he's sharing the names of what he says will be the best - and worst - performing stocks of 2023. [Click here for full details](. You might not be feeling as much relief at the gas pump as you'd like. But as I said, the reality is that oil prices have been dropping since June. And Western governments, like the so-called G7, want them to fall even further... That's because oil is one of Russia's primary sources of revenue. And the country is using that oil money to fund its war in Ukraine. So the G7 is doing just about everything it can to bring the cost of oil down. And it's working. Here's the price chart of West Texas Intermediate crude oil this year... [Chaikin PowerFeed] As you can see, oil prices are down more than 40% since June. And now, the G7 has enacted its strongest measure yet... I'm talking about a "price cap." The price cap is pretty easy to understand. In short, going forward, all the G7 countries and allies like Australia have agreed to pay no more than $60 per barrel for Russian oil. But importantly, that doesn't mean every country has agreed to this price cap. Specifically, China is ignoring the sanctions. However, as Reuters reported last week, Chinese buyers are getting oil at a discount of roughly $6 per barrel. So even though the country's refiners could ultimately pay prices that exceed the price cap, this uncertainty is putting more downward pressure on oil prices. Where does all that leave energy investors? Put simply, energy investors are in a precarious position... The White House has publicly stated that it plans to repurchase oil for our country's Strategic Petroleum Reserve. And it expects to do that between $67 and $72 per barrel. Oil is currently trading around that level. So in the short term, it could act as "support." But remember, China just responded to the price cap that Western nations like the U.S. recently imposed on Russian oil. And put simply, the world's largest country isn't listening. The Power Gauge is quietly shifting its outlook on the energy sector, too... Last week, the system is flipped to "neutral+" on XLE. And under the hood, we can see why... None of the 23 rated stocks within the exchange-traded fund earns a "bullish" or better rating from the Power Gauge today. And XLE just dropped below its long-term trendline. Now, like I said, I might be calling this turning point early. However, today's volatile market requires caution... We don't need to throw in the towel just yet. But we should watch the energy sector closely. That's true even if it remains the best-performing sector of 2022. Good investing, Pete Carmasino Market View Major Indexes and Notable Sectors # Hld: Bullish Neutral Bearish Dow 30 -0.93% 10 19 1 S&P 500 -0.75% 143 258 95 Nasdaq -0.64% 30 54 16 Small Caps -1.23% 517 924 446 Bonds -2.60% — According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks are somewhat Bullish. Major indexes are mixed. * * * * Top Movers Gainers [rating] PARA +5.08% [rating] TSLA +3.24% [rating] NFLX +3.14% [rating] WBD +3.07% [rating] VNO +2.98% Losers [rating] SLB -5.91% [rating] ETSY -5.74% [rating] HAL -5.33% [rating] DXCM -5.06% [rating] RL -4.12% * * * * Earnings Report Reporting Today Rating Before Open After Close ORCL, COUP No earnings reporting today. Earnings Surprises No significant Earnings Surprises in the Russell 3000. * * * * Sector Tracker Sector movement over the last 5 days Utilities -0.28% Health Care -1.29% Staples -1.68% Real Estate -1.72% Industrials -3.19% Information Technology -3.29% Materials -3.32% Financial -3.90% Discretionary -4.47% Communication -4.81% Energy -8.45% * * * * Industry Focus Software & Services 31 115 45 Over the past 6 months, the Software & Services subsector (XSW) has underperformed the S&P 500 by -6.45%. Its Power Bar ratio, which measures future potential, is Weak, with more Bearish than Bullish stocks. It is currently ranked #16 of 21 subsectors and has moved up 1 slot over the past week. Indicative Stocks [rating] MSTR MicroStrategy Incorp [rating] EXFY Expensify, Inc. [rating] PEGA Pegasystems Inc. * * * * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, [click here](. You’re receiving this e-mail at {EMAIL}. For questions about your account or to speak with customer service, call [+1 (877) 697-6783 (U.S.)](tel:18776976783), 9 a.m. - 5 p.m. Eastern time or e-mail info@chaikinanalytics.com. Please note: The law prohibits us from giving personalized investment advice. © 2022 Chaikin Analytics, LLC. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Chaikin Analytics, LLC. 201 King Of Prussia Rd., Suite 650, Radnor, PA 19087. [www.chaikinanalytics.com.]( Any brokers mentioned constitute a partial list of available brokers and is for your information only. Chaikin Analytics, LLC, does not recommend or endorse any brokers, dealers, or investment advisors. Chaikin Analytics forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees of Chaikin Analytics, LLC (and affiliated companies) must wait 24 hours after an investment recommendation is published online – or 72 hours after a direct mail publication is sent – before acting on that recommendation. This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.