Let's notice that although both the XLE and the DUG have established significant extreme prices, and are in the midst of a correction. The DUG has violated its March-June resistance line and is consolidating on the breakout side, whereas the XLE has not violated its March-June support line, and is consolidating on the non-breakout side. From a technical trading perspective, the DUG exhibits much more bullish near-term potential than does the XLE exhibit near-term bearish potential. Both patterns point to additional price action in the post-May 20 direction, however, powerful acceleration will have to wait until the XLE violates key support at 85.50/20.



Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.