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Avoid XOP At All Costs

SPDR S&P Oil & Gas Exploration & Production ETF (NYSEARCA:XOP) is the largest of three funds in its subindustry, the other two being iShares U.S. Oil & Gas Exploration & Production ETF (NYSEARCA:IEO) and PowerShares Dynamic Energy Exploration & Production Portfolio ETF (NYSEARCA:PXE). XOP selects a broad pool of securities and weights them equally, while IEO also selects a broad pool of securities but weights them by market cap. resulting in two companies, ConocoPhillips (NYSE:COP) and EOG Resources, Inc. (NYSE:EOG), each having an allocation of 10+%. PXE uses a quantitative model and then weights them in tiers based on their performance potential. This article deals specifically with XOP.

Examination of a five-year chart shows that XOP has been in decline since late 2016 after experiencing resistance at approximately $42.

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by Steve Auger