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James, just curious, why do you use the EMA instead of the SMA?
I've used both and it doesn't really matter too much. The EMA has an exponential response so it's better at responding quickly to changes, so it might be better suited for very volatile markets like energy.

But I also really like using the 200 day simple moving average.
 

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all good infos james as always !

My problem is: exit the XEG position and then what ?

As you probably know, i hold a very boring boring portfolio consisting of VUN, VCN, VIU, VEE with a sprinkle of ZRE. If i sell my XEG holding i would simply put back the cash in my vanguard ETF's and spread it according to my asset allocation.

My rationale for continuing to hold XEG is asking the following question: Is there potentially more upside left in XEG then in my vanguard indexs funds ? At the moment the answer is still yes !

Also, this is in a taxable account, if i sell now ill have a large tax bill early 2022 !

My strategy (at the moment) is to continue to hold the damn bag at least until the new year !
 

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My problem is: exit the XEG position and then what ?
If it was me, and if this XEG position was quite large versus my "regular portfolio" I would sell some XEG very soon and redeploy that money into the whole asset allocation mix. How much to sell? I would sell enough to shrink the XEG position down to a size that it's not insanely large versus the rest of my portfolio.

e.g. maybe scale XEG down to the point where it's only 10% to 20% of your total investments (all ETFs combined).

Or if XEG is already a small % of your overall ETF total, then maybe you can leave it alone. I have no idea how wealthy you are. Maybe you've got a $20 million portfolio, in which case your $2 million XEG position is not outlandish and can be left alone.

But that's the way I would manage this, if it was my own money. I would look at the overall portfolio of all stock positions and decide how large the % XEG weight should be. For example, I do a bit of market timing in foreign markets (which is risky and speculative) and decided to make it 5% of my total. I also have some aggressive Canadian stock picks, and those are 4% of my total.

So in my case, I have 9% in this speculative, risky stuff. It used to be higher, but I scaled it down to a level that I think is reasonable.
 

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This is a large amount for everyone including me but i am fortunate enough that, while significant, its not a major holding in my overall portfolio. I used the rationale that XEG "is part of my canadian equities allocation".
 

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Don't let the cap gains tax tail wag the dog. Be prudent on when to exit XEG and in what increments. XEG might have room to run to $15 but the rocket ship is losing its stages and the next $5 will be quite slow getting there. I'd split the bill 50/50 2021 and 2022, exiting the position in 2022 as the runway ends into the overall market.
 

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My rationale for continuing to hold XEG is asking the following question: Is there potentially more upside left in XEG then in my vanguard indexs funds ? At the moment the answer is still yes !
Targetting XEG on technicals is a little challenging, because the index has changed quite a bit. The real oil story will be told in the next seasonal cycle, from Jan-Jun 22; when OPEC is back at max production. Can the rest of the world produce 102-104 million BOE/D without supermajors, Canada, or US shale oil growth? Almost universally, analysts say no, or at least it will take 5+ years. I'm waiting to see how that party turns out. SU/CNQ/ERF are my individual holdings.
 

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If you want a more sensitive trigger finger, then you can shorten that to the 100 day exponential moving average. The nice thing about this technique is that as long as the nice uptrend continues, you stay in.
Well things have changed over the last month and XEG is down quite a bit. Yesterday, XLE fell below the 100 day EMA and today XEG fell below it as well.

Now the hard part... figuring out if this is a minor correction, or if the big rally in energy is over (for now).
 

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Fundamentally, the oil market is heavily undersupplied by between 1-3 mboe/d, even after OPEC increases. Is this going to change? Not really, but it is a slow process and we won't run out of oil tomorrow.

Oil is always weak this time of year as most of the hype and news on re-opening and summer vacation is behind. It may be a struggle to see high prices into December; but next year could be the really huge rip. If the world recovers oil consumption, and OPEC maxes capacity, and we are still short 2-3 mboe/d (or more), that is a recipe for $100 oil.
 

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Having sold my IPL, I am now quite underweight in my energy holdings. I have a good deal of SU still -- holding at a substantial loss position. I am considering using my IPL money to average down on SU. Energy related stocks have just been killed in the last few years. It is hard to believe there are not brighter days ahead somehow.
 
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