XLE

Above is a chart of XLE. This has given us a very clear indication of where we are in the bottoming process. As we had said earlier, this is expectedly the last phase of the bear market before a sustained rally for 2-3 months, at least. We are not there yet but very close.

We are in wave 4 of the market (or have been since Mar 3rd). In any case, the 20d and 50 moving averages above look threatening enough, at this point in time and we expect XLE to be pressured downwards by these.  Today's volume was lesser than yesterday which is a bearish divergence considering the breadth and enormity of the rally.

We think this index could start a new leg down by Mar 13(+/-) and should lead to a week to 10 days of final selling. We are very optimistic about our turndate around Mar 27th for now. As for our positions, we might take a small swing short should XLE (& XOM) hit the moving averages, until then we are in cash.