There Goes Oil (Upstream Energy Goes Negative)

As I always say, pay very close attention to the OILU. The Energy Sector SPDR ETF (XLE) always struggles when the OILU breaks under its 20-day moving average.

Good morning:

I sent an email to my colleagues who trade oil and gas yesterday. I wanted them to see exactly what I see.

This is the MicroSectors Oil & Gas Exp. & Prod. 3x Leveraged ETF (OILU). It serves as rocket fuel for leverage and hedging in the energy sector.

The MACD is under pressure, and the RSI is turning under 50. Most importantly, yesterday, the OIL dropped below its 20-day moving average.

As shown in the chart above, there is little positive impact when this indicator falls below its 20-day Simple Moving Average (SMA), particularly for the S&P 500 Energy Select ETF (XLE), which also dropped below its 20-day SMA.