Energy has gone from first to worst.
Energy shares sank Friday, ending April because the month’s worst-performing sector regardless of barely stronger-than-expected earnings from oil giants Exxon Mobil and Chevron. It is nonetheless the top-performing sector for 2021, up almost 30%.
In an interview Friday with CNBC’s “Trading Nation,” Craig Johnson, senior technical analysis analyst at Piper Sandler, mentioned the group’s charts informed a optimistic story.
“I think the charts are telling us a very bullish message at this point in time,” Johnson mentioned, pointing to the Energy Select Sector SPDR Fund (XLE), which tracks the group.
He added that Exxon Mobil, the fund’s largest holding, was near reversing a longer-term downtrend.
“This is a stock that looks like it’s got more room to run and a sector that looks quite positive,” he mentioned.
However, many cash managers are likely to disregard the sector as a result of it makes up solely about 3% of the complete marketplace for shares above a $25 million market cap, Johnson mentioned.
“What we’re seeing right now is that a lot of portfolio managers really are not getting involved with the energy sector even though the charts are saying that you absolutely should,” he mentioned.
As the largest sector gainer 12 months up to now, power seems set to proceed its rally, mentioned Danielle Shay, director of choices at Simpler Trading.
In the identical “Trading Nation” interview, she dished out a $64 worth goal for the XLE, which she mentioned would profit from the financial reopening. The ETF closed down 2.5% on Friday at $49.39.
With earnings season in full swing, “upcoming earnings reports are going to continue to show that this sector is gaining a little bit of strength,” Shay mentioned.
She recommended buying the XLE itself or buying longer-term calls on the ETF, particularly as individuals start to enterprise out with summer season across the nook.
In the quick time period, she recommended buying and selling Marathon Petroleum, which generally rallies forward of earnings. Marathon report earnings on Tuesday. For long-term positive aspects, she really useful seeking to get in on pullbacks in names with optimistic experiences.