The XLE continues to climb off of its 44/94 low from October 20, and as of today has recovered 50% of the prior corrective decline from 54.65 to 44.94.  The form of the decline, the structure of the rally off of 44.94, and the underlying technical conditions, not to mentionthe still-intact longer-term bull trend, all indicate higher prices for the XLE.  From a near-term perspective, if the XLE pulls back into the 48-47 are, it will be considered a healthy rest/digestion period ahead of the next upleg that should propel the ETF to 53.50-54.50 next.  Only a plunge that breaks below the 200-day moving average at 44.94 will wreck the developing bullish pattern.

MJP 10/26/05

Mike Paulenoff is a 25-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his E-mini S&P and QQQQ technical analysis and trading alerts. For more of Mike Paulenoff, sign up for a FREE 30-Day Trial to his E-Mini/Index Futures diary, or try his QQQ Trading Diary.