What If These Aren’t Tops?

Sometimes the biggest moves come from patterns that don’t behave the way everyone expects.

They trap the majority, shake people out, and then make the real move when no one’s positioned for it.

And I’ve gotta say… Energy is starting to look like one of those situations.

This chart below represents Energy stocks relative to the S&P 500, overlaid with Crude Oil futures.

They look almost identical — and for the past couple of years, both have been carving what many would call “major tops.”

But here’s the twist…

What if those tops aren’t tops at all?

If these end up being failed breakdowns, then look out for a ripper.

One of the first things I learned is that failed moves tend to lead to fast moves in the opposite direction.

That hasn’t happened yet — but if it does, the setup for a serious squeeze higher is very real.

In that scenario, Energy $XLE finally breaking above its 2008 highs isn’t some fantasy — it’s the natural next step.

Let me know what you think! I would love to hear from you!

Alfonso De Pablos, CMT

Director of Research, All Star Charts