Here are monthly charts of West Texas crude oil, Oil Service Holdrs, and the S&P Energy Select Spiders. I last commented on crude oil here.
XLE and OIH have both rallied to new bull market highs, contrary to my original expectation. Crude oil, on the other hand is trading about $10 below its 2006 high. My own interpretation of this divergence is that both XLE and OIH are about to make important tops and drop substantially in sympathy with crude oil which should soon resume its bear market.
Note that XLE has rallied to the 3 5/8 multiple of its 2002 low at 19.38. Similary, OIH has rallied to the 4 1/8 multiple of its 2001 low at 41.81. Both these multiples are generally strong resistance levels. I note also that the 64.60 level in crude is the 6 5/8 multiple of the all time low made in 1986 at 9.75.
I believe that the next down swing in crude will carry it to the 4 5/8 multiple of the 9.75 low. OIH will move down to 110 or a bit lower (the 2 5/8 mutiple) while XLE should drop to 41, the 2 1/8 multiple.