Energy Bulls Are Playing the Limbo, But It's Not All Fun and Games

In the face of broad market weakness giving back a sizable chunk of yesterday's rate hike rally, crude oil looks to be dragging energy stocks down with it.

For a few days now, energy stocks were showing some signs of resilience. But that whole mode of analysis is under scrutiny today, with the XLE (energy sector ETF) looking rather ominous on the daily chart, below.

Note the series of well-defined lows dating back to August, around the $59.50 zone. At first, buyers showed up in droves earlier this week, given the impressive buy volume last Thursday and then on Monday. 

But the more times we probe well-defined support in a bear market (as defined by that declining 200-day moving average/yellow line well above price) the more likely it is to break for a fresh bear leg down. 

Ultimately, the bear trend tends to take precedence over short-term signs of life, such as random one-day surges in buy volume. So energy bulls had better stop playing the limbo down at these lows because it is no longer fun and games with crude staying persistently weak.