The chart above shows that although this ETF has done well, it is in technically overbought territory. The RSI is high and the MACD is approaching levels where the ETF previously sold-off. In addition, the volume totals for this rally aren't that exciting.
That's why some news stories today make my wonder whether this sector will continue to lead the market.
From CBS.Marketwatch
Chevron Corp. shares came under pressure Wednesday after the oil giant warned investors to expect third-quarter net earnings "significantly below" the record $5.4 billion it posted in the previous quarter.
Drawing on preliminary numbers for the first two months of the quarter, Chevron late Tuesday blamed the weaker results on "a sharp decline in refined product margins for the downstream business and the impact of non-recurring items."
And Valero -- the fourth largest refiner by marketcap -- had a similar announcement today:
Valero Energy Inc. joined Wednesday the parade of big oil refiners issuing profit warnings, becoming the latest victim of higher crude prices squeezing margins.
The warning comes on the heels of similar moves by Chevron Corp, ConocoPhillips and Marathon Oil.
With oil prices of $75-$82 a barrel the norm in recent months, the cost of raw materials for makers of gasoline, jet fuel and heating oil has jumped significantly from year-ago levels, which were in the low $60-a-barrel range.
We're still early in earnings season, but this is the kind of news the usually leads to profit taking in the short-run.
