The energy has gone from the first to the worst.
Energy stocks fell on Friday and ended April as the worst performing sector for the month, despite gains from oil giants Exxon Mobil and Chevron slightly stronger than expected. Even so, it’s the top performing sector for 2021, up nearly 30%.
In a Friday interview with CNBC’s Trading Nation, Craig Johnson, Piper Sandler’s senior technical research analyst, said the group’s charts told a positive story.
“I think the charts are telling us a very optimistic message at this point,” said Johnson, referring to the Energy Select Sector SPDR Fund (XLE), which is tracking the group.
He added that Exxon Mobil, the fund’s largest holding, is on the verge of reversing a longer-term downtrend.
“This is a stock that appears to have more headroom and a sector that is looking reasonably positive,” he said.
However, many money managers tend to ignore the sector as it accounts for only about 3% of the total market for stocks over a market cap of $ 25 million, Johnson said.
“What we are seeing right now is that a lot of portfolio managers are really not into the energy sector, even though the charts say you should,” he said.
Danielle Shay, director of options at Simpler Trading, said Energy looks set to continue its rally as its biggest year of profits in the industry to date.
In the same “Trading Nation” interview, she set a target price of $ 64 on the XLE, which she said would benefit from the economic reopening. The ETF closed 2.5% on Friday at $ 49.39.
With earnings season in full swing, “upcoming earnings reports will continue to show that this sector is gaining a bit of strength,” Shay said.
She suggested buying the XLE yourself or making longer-term calls to the ETF, especially when people start making their way around the corner with summer.
On the short term, she suggested trading Marathon Petroleum, which usually recovers before profit. Marathon report on Tuesday. For long-term profits, she recommended engaging in name pullbacks with names that reported positive results.
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