Some traders think the energy rally is about to wane, despite the sector being one of June's big winners.
, the oil and gas exploration ETF, has actually seen a bigger gap with oil in the last few days than normal.
"In last five days, [the XOP] has gapped at a 6 percent spread from oil, and traditionally that's 1 percent," he said. "I think that's been dragging down these ETFs." Since 2007, energy stock's weighting in the S&P 500 dropped from 15 percent of the index's stocks to just 5 percent today. DataTrek's Nick Colas says given the outlook for oil and energy stocks, that's the exactly how investors should be weighing the sector in their portfolios.
"You hold the 5 percent weighting, which is the S&P weighting, and you go on autopilot and rejoice in the fact that lower oil prices are good for the U.S. economy," he said on "ETF Edge." On Monday, oil still hovered at its highest level in almost a month. The XLE is still about 8 percent down from its 2019 high in April.
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