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Is it right to buy Energy for a bounce? Equal-weighted Energy has trended up sharply over the last couple weeks, but these gains remain part of a lengthy downtrend in the relative picture of Energy to SPX since October 2023. While investors heard reports of possible China-led supply shock events like banning US-sanctioned Tankers from Shandong Port, the entry for most sanctioned Oil which might drive up shipping costs (1.74 million barrels per day from Iran, Russia, and Venezuela in the last year) However, Crude failed to lift in trading and closed down negative. Overall, my feeling is that Energy likely does outperform in Q1 before heading lower, but at current levels, it's likely that Crude, and by extension, Energy might require a "breather" before being able to push higher. This downtrend shown below is a daily chart of Equal-weighted Energy (RSPG0.72% ) in ratio form to the Equal-weighted SPX (RSP-1.38% )

Energy has been on the minds of many investors lately as it should be, with a meaningful breakout being seen in the Equal-weighted Energy ETF (RSPG0.72% ) by Invesco- This is a bullish move, and i feel that the next 1-2 months are great for Energy and it remains a technical overweight- I expect a move up to the high 80s is possible for equal-weighted Energy

Equal-weighted Energy ETF from Invesco (RSPG0.72% ) managed to break out above the key downtrend which has put Energy on a bit better footing in the last month, and performance has been a bit more in line with SPX after having lagged on a rolling three-month basis. At present, near-term trends and momentum remain bullish, so it's right to stick with this trend until it ends