Oil Stocks vs Crude Oil

I took profits on a portion of my long position in oil stocks. As you can see oil stocks are making new highs while crude oil is making a lower high. I take this as a warning sign that we may see a downturn here so I took some profits leaving me with about half of my position.

If oil and oil stocks continue to move higher in the days to come I will hold my remaining shares that I have long, but if I see these stocks moving lower I will exit the rest of my position. This was a big trade for me and I plan on keeping my profits.

XLE actually made a new high today so technically the trend is looking good, but the divergence between crude oil and oil stocks is something that I can't ignore. If you recall I got long oil stocks around March 19th based on the divergence between crude oil and the oil drillers. I literally caught the bottom and you can read how I did it by clicking here.