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At the start of the year, investors in energy stocks had plenty of reasons for optimism. Global economic growth appeared reliable enough to sustain a modicum of stability in oil commodity pricing. Analysts anticipated that natural gas prices would climb off 2009 lows, aiding the integrated oil and gas majors. What's more, these giant integrated oil and gas corporations sported historically attractive price-to-earnings ratios. And even the slightest hiccup in the Middle East -- from the Israeli-Palestinian conflict to Iran's nuclear ambitions -- favored energy ETF consideration.

That's how one might have assessed prospects for the sector at the start of the year, anyway. Then the world threw a few Matt Latos curveballs.

China began to slow its growth through tighter bank reserve requirements, causing many to question the dynamic country's energy needs. BP's infamous oil spill lasted five times as long and caused 10 times the damage as many might have guessed at its onset in April, leading to massive penalties and lost revenue. Meanwhile, the Obama administration instituted an offshore drilling moratorium, creating fear of taxing restrictions for all drillers in the future. Add cap-and-trade policy goals for the White House and suddenly energy ETF investing looks less and less desirable.

Year-to-date, seven of the 10 primary economic sector ETFs have risen above a long-term, 200-day moving average. The three that have yet to do so?

SPDR Select Energy

(XLE) - Get Energy Select Sector SPDR Fund Report


SPDR Select Healthcare

(XLV) - Get Health Care Select Sector SPDR Fund Report


SPDR Select Financials

(XLF) - Get Financial Select Sector SPDR Fund Report

. (In previous commentary, I've addressed the adverse impact of government intervention on these three underperforming segments of the U.S. economy.)

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Is the glass three-quarters empty, then? Or one-quarter full?

A more optimistic believer could make a case for the reality that global oil demand is indeed growing. Supply isn't exactly readily available either. So unless there's a true double-dip in developed countries, supply-demand favors rising oil prices. And we're at the higher end of the trading range at $77 per barrel.

Also, since oil is priced in U.S. dollars, further devaluation acts as a tailwind for oil explorers, producers, storage, transporters and refiners. In fact, if the Dollar Index holds below a 200-day average, I wouldn't be surprised to see oil-related ETFs outperform over the next three to six months.

Nevertheless, broad-based energy ETFs have more than a few hurdles. Most of the energy ETFs are stuck in the lowest quartile of relative strength -- the bottom 25%.

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Disclosure Statement: ETF Expert is a website that makes the world of ETFs easier to understand. Gary Gordon, Pacific Park Financial and/or its clients may hold positions in ETFs, mutual funds and investment assets mentioned. The commentary does not constitute individualized investment advice. The opinions offered are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial or its subsidiaries for advertising at the ETF Expert website. ETF Expert content is created independently of any advertising relationships. You may review additional ETF Expert at the site.