Traders on what to watch
The energy rally continues.
The XLE energy ETF once again outstripped the broader market over the past month, rallying nearly 13% against the 4% drop in the S&P 500, as global demand for oil outstrips supply. A decision to exit OPEC + when the bloc meets on Monday could be the next big upward or downward catalyst for the sector.
Craig Johnson, chief market technician at Piper Sandler, remains bullish on the industry.
“It’s very clear, any sort of move from here is likely to go all the way up to $ 65, then you’re going to see a breakout to the upside,” he told Trading Nation on Friday. from CNBC. “You hit a magnificent multi-year high low when you look at this XLE chart.”
The XLE ETF closed at $ 53.84 on Friday. A move to $ 65 implies a 21% hike.
Johnson said that while many portfolio managers tend to undervalue energy companies, the global environment and the technical setup of the sector make it a solid bet.
“These portfolio managers will not be able to avoid this space for a long time,” he said. “For the traders out there today, I think you need to get ahead.”
He suggested that traders buy Devon Energy, Range Resources, EOG Resources and Pioneer Natural Resources.
“These are all stocks that should probably be bought, because they will definitely benefit from it in the future,” he added.
In the same interview with “Trading Nation”, Michael Bapis, Managing Director of Vios Advisors at Rockefeller Capital, also advocated for the sector.
“The energy sector has been criticized during the pandemic,” he said. “They will also benefit from the recovery.
Fundamentally, Bapis said, many of these energy companies have low price-to-earnings ratios and high dividend yields, making them strong assets, especially in today’s environment of rotating growth. -value.
The sector will also benefit as winter approaches and the demand for natural gas and oil increases, exacerbating the current imbalances between supply and demand, Bapis said.
“I see the recovery lasting,” he said, adding that “if we look 12 to 18 months from now you will see this sector higher.”