In the chart below, you’ll see the divergence between the VIX and the performance of the XLE, a broad energy sector ETF, over a five-year period. VIX is a function of price, so there will be an inverse relationship with the XLE.
From a longer-term perspective, with the XLE approaching all-time highs and the VIX all-time lows is not a great set-up for future returns. In the immediate and intermediate terms, though, the sector is bullish TRADE and TREND, says our Energy Sector team.
