5 Energy Stocks That Are Gaining Momentum

The major stock market indices regained much of their losses yesterday but may face an uphill climb again today.  One of the bright spots in the market over recent days/weeks has been the Energy Sector. Today I’ll comment and look at 5 Energy stocks in the Oil & Gas Exploration and Production Sector that look good.

Energy has been a leading S&P sector recently, with the S&P Oil & Gas Exploration and Production ETF (NYSEARCA:XOP) and Oil Services ETF (NYSEARCA:OIH) both higher again yesterday.

The US Dollar index decline accelerated yesterday, undercutting earlier week lows. This is providing for continued strength across commodities and notably WTI Crude Oil prices. For now, Energy stocks are in favor.

Crude Oil has been strong and charts of both XOP and OIH look attractive. Furthermore, charts of XOP vs OIH should allow XOP to begin outperforming. XOP and several E&P stocks are still meaningfully down from 2014 highs (to the tune of 60%) but may be ready for mean reversion.

Below are 5 energy stocks I like from a technical perspective. Some are more favorable near-term, others intermediate-term. Additionally, I am favoring XOP over OIH… but OIH over the broader Energy Sector ETF (NYSEARCA:XLE).

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SM Energy (NYSE:SM)

SM Energy has exceeded its downtrend from its 2014 highs. The stock now appears to be breaking out of a minor base (built since the Spring) with yesterday’s move over 35.60.

A quick move to 37.75-38 looks possible with intermedterm moves up to near 45-47.50 possible.  Key support near 33.21 (i.e. stops).

Chesapeake Energy (NYSE:CHK)

There’s a good possibility that Tuesday’s breakout could lead CHK all the way up to 6.90 before any slowing. Shares have formed a 3 month base which appears to be leading to upside. I think there’s good risk/reward for 1-2 week longs, technically.

Laredo Petroleum (NYSE:LPI)

Not as timely potentially on a short-term (3-5 day basis), but Laredo Petroleum looks to have built a very good underlying structure. It should get to 14.00 from 12.90, with a rally over 14.00 potentially leading to a rise to 20.00 in the weeks and/or months ahead.

For now, this Is just starting to emerge, and needs to be chased on movement over 14 as this could potentially regain .38-50% of the prior decline.

WPX Energy (NYSE:WPX)

The recent rise above its June highs is encouraging for WPX Energy shares. This should help shares reach last May highs near 14.60.  Momentum is slowly getting overbought on a daily basis but nowhere near overbought on a weekly basis. WPX has barely recouped 40% of what it lost since 2014.  So it looks to be an attractive long. Thinking about a small buy here with adds on any weakness. I’m looking for 14.60-15.00, unless lower support fails (i.e. set a stop).

Sanchez Energy (NYSE:SN) 

Shares of Sanchez Energy have built a nice base here. SN’s stock price is now within striking distance of May highs.  Movement up to 10.00 looks likely in the near-term. A move over this would open things up for a much bigger intermediate term move.

Sanchez Energy is the best performing stock in the Oil & Gas Exploration and Production ETF (XOP) over the last month. It looks like it will continue to show relative strength and worthy to add on weakness.

Thanks for reading and have a great weekend.

Twitter:  @MarkNewtonCMT

The author may have position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.