It might be about time for Energy to start making some moves. It's been well documented that the energy sector, specifically XLE, has been underperforming the rest of the stock market for two solid years. But I think that enough pressure has built up during this recent consolidation that we can expect a major move in energy on a relative basis.
Take a look at this chart below. It shows Energy represented by the XLE compared to the S&P500 SPY. This 4-month wedge formation has an upper trendline following closely along the 50 & 200 day moving averages (blue & red dotted lines):
I think that the Relative Strength Index is also giving us a good sign as it has not reached oversold conditions since the beginning of the summer. This supports our belief that Energy has been, and still is in a bull market relative to the S&P500. A breakdown below this year's lows in relative prices would invalidate this notion. But a breakout above the above mentioned resistance factors would confirm the breakout and probably bode well for equities as a group. Some of these integrated names like Exxon and Chevron have humongous market capitalizations and are heavy in the cap-weighted averages.
There are some fascinating developments going on here that we'll be monitoring closely.