The XOP is +34% and the OIH +36% YTD
We look at XOP vs the QQQ - it appears there could be significantly more mean reversion
It Was the Best of Times, It Was the Worst of Times
The broader market is off to its worst start in decades with no tangible signs of respite. Inflation, post-Covid growth indigestion, rising rates, geopolitical concerns and valuation carnage have weighed on broader U.S. markets.
Meanwhile Energy has ripped higher
We took a look at the XOP (generally midcap E&Ps) versus the QQQ (technology bellweathers). The data suggest the recent relative moves may be in the early innings.
Global oil & natural gas supplies are tight and shrinking in recent months. The world is facing significant uncertainty related to Russia/Ukraine. The Fed is trying to induce a slowdown or even recession to tame inflation. The XOP-QQQ spread likely has room to run unless the Fed pushes the U.S. into a deep recession.