Energy Select Sector SPDR Fund (XLE)

(A Top Pick May 11/17. Up 1%.) As soon as he bought this, it promptly went down, but he still likes the sector. US based energy should do well over time.

The energy stocks have really lagged the market. Energy stocks are extremely highly valued even though they are expecting 270% earnings growth. These stocks have been really out of favour though.

American energy stocks are at their lows, which is a pretty good reason for buying this.

US energy index ETF. It is so out of favour now, but there are a number of things that are lining up. The Saudis want to get the price of oil up because they want to sell off an asset. He is buying it because it is out of favour and he prefers it to the Canadian energy sector.

Energy. This is a very good ETF. He would be holding this, especially since it has been beaten down.

If you believe that oil is on sale, is there an ETF, US or Canadian, that has been beaten down worse than the others, and is this an opportunity? There are a couple that you could look at. iShares S&P/TSX Capped Energy (XEG-T) and BMO S&P/TSX Oil and Gas (ZEO-T). These are very similar, so either one. On the other hand, you could go into the US and pick up this one, which has not been slaughtered quite as badly as the Canadian stuff.

(Top Pick Feb 20/14, Up 9.28%) He sold out of energy and is not looking to get back in until later on in July.

(A Top Pick Jan 3/14. Up 7.82%.) Energy tends to do well from early January all the way through to May. Oil prices, gasoline and gas prices tend to go up at that time. The period of seasonal strength is coming to an end now.

This trade has not worked in the last few years as well as it should have, but right now you want to be in that sector. It is a long term trend based on supply/demand imbalances. He may get out a little early this year.

(Energy is one of the 3 sectors he suggested in remarks under January Effect.) The average gain for energy between January 17 and May 5 is about 7.8%. Has a tremendous frequency of positive results, about 90% of the time. This is more of a Buy on weakness. Try to get it at around its 20 or 50 day moving average.

Seasonal trend for oil just ended. Then we get another in the summer. There is a modified cup and handle. If it gets above 81-1/4 he would buy it but thinks there is better ones in Canada like SU-T. However you get the diversity of an ETF with this one.

Historically the US energy sector does very well from around the end of January right through until the 2^nd week of May. Energy stocks in the US have a high correlation to the price of gasoline. What is happening to the price of gasoline will pretty well indicate what will happen to this ETF. (See Top Picks)

Oil and Gold Correcting? If you are making a trade that will last the next 2 or 3 weeks, you could make money buying at the bottom of the range, but over the next 2 or 3 years it will trade in a range.

If you are going to have a bull market in energy, which he believes we will, an ETF is probably a better thing to do than individual stock picking.