Energy lags behind in April. What traders are watching in the first sector of 2021
Energy went from the first to the worst.
Energy stocks fell on Friday, ending April as the worst performing sector of the month despite slightly stronger-than-expected earnings from oil giants Exxon Mobil and Chevron. It is nevertheless the best performing sector for 2021, up almost 30%.
In an interview Friday with CNBC “Trading Nation”, Craig Johnson, senior technical research analyst at Piper Sandler, said the group’s charts told a positive story.
“I think the graphics give us a very optimistic message right now,” Johnson said, pointing to the SPDR Select Energy Sector Fund (XLE), which follows the group.
He added that Exxon Mobil, the fund’s largest holding, was on the verge of reversing a longer-term downtrend.
“It’s a title that seems to have more leeway and a sector that looks rather positive,” he said.
However, many fund managers tend to ignore the sector because it only represents about 3% of the entire market for stocks above a market cap of $ 25 million, Johnson said.
“What we’re seeing right now is that a lot of portfolio managers are really not getting involved in the energy sector, even though the charts indicate that you absolutely should,” he said.
As the biggest winner in the industry to date, energy is expected to continue its rally, said Danielle Shay, director of options at Simpler Trading.
In the same “Trading Nation” interview, she handed out a price target of $ 64 for the XLE, which she said would benefit from the economic reopening. The ETF closed 2.5% lower on Friday at $ 49.39.
As the earnings season is in full swing, “future earnings reports will continue to show that this sector is gaining a bit of strength,” Shay said.
She suggested buying the XLE itself or buying longer term calls on the ETF, especially as people start to venture as summer approaches.
In the short term, she suggested negotiating Oil Marathon, which usually rallies before profits. Results of the Marathon report Tuesday. For long-term gains, she recommended looking to get withdrawals in names with positive reports.