While everybody's attention is focused on the NDX/XLK/XLY/XLC high P/E complex, the Energy sector is experiencing a severe range contraction. Both XOP and XLE are coiling in narrow ranges. Huge breakout is expected next week.
No firm idea about the direction of the expected breakout but one can speculate. If Russia announces a temporary truce on or about May 9 after the Azovstal operation is complete, that could trigger a big sell-off in energy. If Saudis don't pump more and Ukraine conflict escalates further, oil and natural gas could rocket up further. The very strong jobs data today and rising interest rates are supportive of an upside breakout in energy equities.
