The Energy Select SPDR (XLE) has carved out a very bullish pattern off its September lows near 50.  In fact, my intermediate-term work argues that all of the action from January into September 2006 represented not a massive top but a huge, high-level bullish congestion area within an incomplete bull trend off its July 2002 low near 19.

If my work proves accurate, then the XLE is heading for new highs above 60.15 into the 62-64 target zone to finish the 2002-2006/07 uptrend.  From a near-term perspective, I could be remiss in waiting for a pullback to 56.60, but the XLE is up about $2 in the past week, so I choose not to chase the upside right here, right now.

Having said that, only a break of 54 will begin to compromise my current outlook, while a decline that breaks below 53 will go a long way towards invalidating it.

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.