XLE Forecast + Trading Strategies




Price Forecast:


Bearish<->Bullish




Bullish Case: XLE could benefit from rising geopolitical tensions and a recovery in global demand, leading to potential price increases supported by the observed bullish risk premium in options activity.




Bearish Case: XLE may be pressured by ongoing oversupply issues and weak economic signals, which combined with high implied volatility could lead to significant downward price corrections.




Potential Outcomes:

1) XLE rallies 5-10% in the next month (30% probability).

2) XLE declines 2-7% due to oversupply concerns (40% probability).

3) Flat trading around $90 (30% probability) reflecting market indecision.




Trading Oracle: Consider initiating a bullish debit spread by buying the $90 strike call and selling the $93 strike call, targeting expiration around mid-November. This approach capitalizes on current bullish sentiment while limiting risk exposure.



October 27, 2024


Energy Select Sector SPDR Forecast

XLE        Energy Select Sector SPDR











Correlated Assets

Assets that tend to move strongly with XLE



SM Forecast + Options Trading Strategies   SM  SM Energy (0.91)


AL Forecast + Options Trading Strategies   AL  Air Lease Corp (0.89)


NOG Forecast + Options Trading Strategies   NOG  Northern Oil and Gas (0.88)


FANG Forecast + Options Trading Strategies   FANG  Diamondback Energy (0.88)


IEO Forecast + Options Trading Strategies   IEO  BlackRock Institutional Trust Company N.A. - iShares U.S. Oil & Gas Exploration & Production (0.87)



Uncorrelated Assets

Assets with little price relationship to XLE



HST Forecast + Options Trading Strategies   HST  Host Hotels & Resorts (0.0)


LZ Forecast + Options Trading Strategies   LZ  LegalZoom.com (-0.0)


KEYS Forecast + Options Trading Strategies   KEYS  Keysight (0.0)


SPGI Forecast + Options Trading Strategies   SPGI  S&P Global (-0.0)


TAL Forecast + Options Trading Strategies   TAL  TAL Education (0.0)



Anticorrelated Assets

Assets that tend to move strongly against XLE



ADBE Forecast + Options Trading Strategies   ADBE  Adobe (-0.76)


NOVA Forecast + Options Trading Strategies   NOVA  Sunnova Energy International (-0.79)


SCO Forecast + Options Trading Strategies   SCO  ProShares UltraShort Bloomberg Crude Oil (-0.82)


DRIP Forecast + Options Trading Strategies   DRIP  Direxion Daily S&P Oil & Gas Exp. & Prod. (-0.93)


ERY Forecast + Options Trading Strategies   ERY  Direxion Daily Energy Bear 2X Shares (-0.98)









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