Oil continues to be the best performing asset this year. Black gold is +55% from December lows, making it an annualized return of almost 300%. That’s rather impressive, especially as oil is not a “company” where fundamentals can change abruptly.

The move higher has surprised many and is attracting a lot of investors chasing momentum. It is interesting to note that the front month oil contract now has such a “strong bid”, that the skew has vanished, i.e. investors pay the same amount of volatility for upside calls as they pay for downside puts. The panic is shifting to chasing the upside exposure, i.e. oil FOMO.

While the oil momentum continues taking oil higher by the day, the energy, oil and gas stocks have traded relatively “muted”. Chasing oil longs feels like a late trade, but given the lagging performance of both the US energy etf, XLE US, as well as the European SXEE index, both these could be laggards worth taking a closer look at.

XLE US reached the 200-day average yesterday. Watch for a possible break above that could ignite a chase the laggard squeeze.

Source, charts by Bloomberg, @iv_technicals