Energy charts are up against significant resistance levels and look primed to make a significant long term move. The equity rally after the elections have now matured to a point where energy stocks generally start to flourish. You can see XLE is starting to perk up a bit. XNG is trying to make a big push as well.
If you also take into account the last week's action in the energy service index OSX, an energy break out parade may just be getting started.
One thing to be aware of is the markets have pulled back each time these indexes have reached the resistance trend lines capping prices. Maybe this happens again and prices consolidate closer to the breakouts. Maybe the sector just breaks out. We don't know, but if these patterns break out portfolio managers need exposure to the space.
Also, this potential move is so large, it could be a great time to get long for any type of trade or investment. Here are some examples that represent some of the bountiful opportunities in the space:
DVN is at an interesting level as flat divergences have shown up in the weekly chart as large volume has poured in. This leads me to believe we are at bottoming levels. Also, with prices near the panic lows of 2011, the risk-reward is pretty good for investors.
RRC is sitting near all time highs in what appears to be a large consolidation pattern. The company has been a leader in nat gas production growth. I actually own some because it seems well positioned.
WG is a speculative play, with high levels of debt and unstable earnings and cash flow. However, the company is securing deals and has had 20+% bookings and revenue growth. The bet is that the company will grow it's way out of it's problems. It would be more attractive if there were more shorts betting against it.
MRO is flat winning and can continue winning when it clears the all time highs around 36. Trading 10x next years expected earnings with a 2% yield; there is plenty of room for the valuation to stretch.
Other stocks that are well positioned technically and in terms of growth include: OAS, ROSE, CLR and CHK. If there are any you like that I haven't mentioned, feel free to post them in the comment section! Good luck!
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