Stockmarket

This ETF Says Inflation Is Just Getting Started



© Reuters. This ETF Says Inflation Is Just Getting Started

Instead of slowing down, being transitory or tapering off, the move higher in inflation may just be getting started. At least that’s what the action in the Energy Select Sector SPDR Fund (NYSE: XLE (NYSE:)) ETF could be telling us. It looks to be on the verge of a long-term breakout.

XLE is a basket or portfolio of dozens of energy companies. These companies typically have large holdings of oil and/or . As the prices of these commodities move higher, the value of the companies’ stocks increases and this pushes them into rally mode.

As you can see on the following long-term chart, the $78 level has been resistance for XLE since December 2015. But now that resistance appears to have been broken.

This could be telling us something important, and it isn’t good. The move higher in inflation may just be getting started.

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