The latest industry to demonstrate bullish sector rotation in this current rally is energy (oil and gas), which is showing the same signs of institutional money flow that semiconductors began exhibiting before the group took off last month.

Last week, several energy ETFs broke out above key levels of horizontal price resistance and are now set up for momentum swing trades. Of those ETFs that broke out, the one with the best long-term chart pattern is the S&P Select Energy SPDR ($XLE). On the long-term monthly chart below, notice that $XLE just broke out above resistance of its prior highs from 2011 (which is not readily apparent on the shorter-term daily chart interval):



As marked by the horizontal line, the breakout level was at the $81 area. Since $XLE closed at $80.77 last Thursday, the breakout only occurred in the most recent trading session of May 17 ($XLE gained 1.7% vs. S&P 500 rallying 1.0%). Since $XLE is only 1.3% above its monthly breakout level, it is not too far extended to enter near the current price level. As such, $XLE is now a potential swing trade entry going into today's session. Subscribing members of our nightly ETF and stock trading newsletter should note our exact trigger, stop, and target prices for this trade setup in the "watchlist" section of today's report.

After recently closing out swing trades in both Semiconductor HOLDR ($SMH) and DB Gold Double Short ($DZZ) for substantial net gains, our current open ETF positions are US Natural Gas Fund ($UNG), Guggenheim China Real Estate ETF ($TAO), and iShares Indonesia ($EIDO).

$EIDO has not yet blasted off since our swing trade entry, but the ETF is still showing an unrealized gain and closed the week at a new all-time high. As shown on the weekly chart below, $EIDO has been forming a "base on base" pattern, so a rally above last week's high could spark another wave higher within the current uptrend:



$TAO has been pulling back since its May 8 high, but the ETF found support at its 20-day exponential moving average and is now poised to resume its uptrend and rally to a new swing high. For anyone who happened to miss our initial buy entry into $TAO, an entry just above last Friday's high of $23.07 provides a relatively low-risk secondary buy entry point because the ETF continues to act fine.

Although $UNG retraced a bit sharply off its highs earlier this month, last Friday's 2.7% gain on higher volume was encouraging. If it gets above the May 17 high, $UNG will have broken out above convergence of its 20 and 50-day moving averages, which could enable the ETF to quickly move back to its prior highs. As such, we cannot give up on this trade yet and will continue to honor the original stop price for now.

On the stock side, our breakout trade in Pandora Media ($P) hit its adjusted stop on the open last Friday, enabling us to close the trade with a gain of +$1,072 gain on a 14% move. We'll soon be writing up an educational technical review of that swing trade and posting it on our blog at http://www.morpheustrading.com/blog.

Deron Wagner is the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, and MorpheusTrading.com, a trader education firm.