For those of you seeking to gain insight as to what the bigger picture is in the energy sector then look no further. 

The energy specific sector of the S&P (XLE) has been on a tear since early 2003, but signs are emerging that this upward trend may be slowly coming to an end. 

The index has struggled to maintain its 45 degree angle uptrend over the past few months. Investors are now beginning to take profits and place their bets on other emerging opportunities.

Signs of this weakness can be found in the Moving Average Convergence Divergence (MACD) indicator on a 4 year monthly chart which has now turned negative for the first time in approximately three years! The only key indicator holding this index up is the Directional Movement Indicator (DMI) which appears to be slowing collapsing towards negative territory. If this happens, I expect the index to begin pulling back in dramatic fashion.

Additionally, there is also a negative divergence between the price and the Relative Strength Index (RSI). A short explanation of this is when the price of a security or index continues to make new highs at the same time the RSI trends downward.

My negative outlook for this sector will extend only a few years out. If all Fibonacci retracements ratios (38.2%, 50%, and 61.8%) are not taken out on the downside, the overall upward trend may still continue. You may want to take some profits off the table at 38.2% pullback and then re-evaluate from that point forward.

Click here or search via google to read up on Fibonacci ratios and their meaning.