Northern South America and Mexico form one of the most strategically important energy corridors in the Western Hemisphere. Venezuela holds the world’s largest proven oil reserves, Guyana is the fastest-growing new offshore producer globally, Suriname is on the cusp of its own offshore breakthrough, and Colombia and Mexico remain major regional suppliers despite production challenges. These basins feed Atlantic markets, anchor shipping lanes, and influence U.S. refining margins; meaning political stability or instability in this block has an outsized effect on global supply expectations. As Guyana–Suriname development accelerates and Mexico shifts energy policy priorities, investors have begun reassessing the region not only for production growth but for its growing role in medium-term global supply resilience.
At the same time, the political climate has turned highly charged. Venezuela’s domestic turbulence, territorial disputes with Guyana, and its negotiations with the U.S. all influence expectations for sanction risk and production recovery. Mexico’s shifting political priorities and Washington’s shifting posture — including rhetoric from Trump toward Mexico, Venezuela, and Colombia — inject additional volatility into cross-border investment, trade, and migration policies. Markets are responding less to actual production changes and more to policy uncertainty: whether sanctions tighten or loosen, whether Mexico nationalizes more of its energy value chain, and whether U.S. political pressure escalates. That uncertainty has contributed to a rising geopolitical-risk premium within the energy sector.
Overlaying all of this is an increasingly visible strategic relationship between Iran and Venezuela. Iran has supplied technical support, refinery parts, fuel, and even drone technology; a sign of deeper defense and industrial cooperation. For investors, the significance isn’t the individual projects but the signal: Venezuela is diversifying its strategic alliances, reducing dependence on Western frameworks, and gaining operational support from a sanctioned partner. This dynamic raises the probability of renewed U.S. sanctions pressure or counter-moves, which could disrupt Venezuelan supply expectations and add to regional uncertainty. Collectively, these factors create a backdrop where the energy sector is beginning to reflect higher geopolitical sensitivity; a key setup for your next discussion on why the sector appears to be breaking out.
Re-Emerging Momentum in Energy: A Technical View Through SIA Analytics
All that aside, let us turn to the technical picture as it applies to the Energy complex, based on SIA’s analytics. The first and likely most important metric we track at SIA is relative strength, which can be assessed from a sector perspective using the daily readings generated by our analytical algorithms. This reading has been plotted alongside the attached chart of the SIA Energy Equal Weight Index (EWI), where we can observe the sector’s relative strength rallying from the bottom of the matrix up into the yellow zone of the SIA Sector Report.
This move up the matrix is notable, as it mirrors the last relative strength rally observed during the early-year market correction. At that time, markets experienced a sharp pullback, likely prompting a rotation from high valuation stocks and sectors into safer haven investments, particularly those trading at extremely low fundamental valuations, such as many oil, gas, and coal companies.
Turning to the point and figure chart of the SIA Energy EWI (EWI345), we see that while the sector gained relative strength earlier in the year, the rally was previously constrained by overhead resistance and ultimately stalled. This time, however, the situation appears to be different as the current rally coincides with a breakout on the point and figure chart. A quadruple top in late summer, combined with a more recent double top, produced a catapult breakout, allowing SIA to extrapolate upper resistance levels at 84,936 and 87,510 using both vertical and horizontal P&F counting methodologies.
With the breakout, prior resistance now illustrates nearby support, initially at the 3-box reversal level of 76,892, with a broader support zone of 76,892 to 75,377. A prudent stop loss level could be inferred at 71,718 in the event of a failed rally or extreme market volatility.
One Of These Things (Is Not Like The Others)
The next vector of analysis comes from the SIA Sector Scope, which presents all sectors in a single comparative table. As the Sesame Street phrase goes, “one of these things is not like the others.” Here, Energy stands out with a bullish percent reading of 79 to 87 percent: levels not observed in any other sector, which is notable given the heightened volatility seen elsewhere in recent weekly equity leader reports. Energy appears to be acting as a defensive safe haven, alongside sectors such as Drugs, Banks, Utilities, and Real Estate.
While slightly tangential to Energy, it is also worth noting the declining relative strength and bullishness of sectors like Software, Hardware, Transports, Internet, and Construction. Taken together, these patterns may represent a subtle sector rotation that is not yet widely discussed. Stay tuned.
Disclaimer: SIACharts Inc. specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investors investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIACharts Inc. nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.
