Exploration Excellence:

  • While many like to play the mean reversion game, I prefer to buy strength. In my opinion trading instruments act both weak and strong for a reason. Of course, it is not always known why, but the interpretation is seen in PRICE action. Looking at the major S&P sector leaderboard on a YTD basis energy should come out on top, barring some very heavy Q4 weakness as the XLE is up 50%, and its next closest competitor in the XLF is higher by 30%. Peering deeper into the energy arena the two largest sub-sectors are exploration and equipment, via the XOP and OIH. Both are up well over 100% YTD, not a typo, but the XOP has been acting better as of late, especially during the summer softness in energy. On a 1 and 3 month look back period the XOP is up 20 and 4% respectively while the OIH has gained 12% over the last one month, and is DOWN 7% over the last 3 months. As the XOP grapples with the very round par number and trades just 1% off recent 52-week highs (ETF was over 300 in early 2014) the OIH is 15% off its peak made in June. Devote your capital to where it is treated best. That means exploring the leading E&P names. 

South American Leadership:

  • Within the energy space, there are a few big players south of the border. Of course, there is the privately held Pemex in Mexico but let's take a look at three recognizable names in South America. The largest is PBR which is actually lower by 4% YTD. Compare that with YPF which is UNCH in 2021, and then the chart below of EC has advanced 15% thus far this year. PBR has a decent look to it as it drills, pun intended, its 200 day SMA with a focus in the near term on a double bottom pivot of 11.36. We focus on leadership here, and the EC chart has the nicest complexion of the three. In mid-September it touched its rising 200 day SMA for the seventh time since February, dispelling my belief that the more times a line is touched the weaker that support becomes. I would prefer the right side of the base to develop a little more gradually, but PRICE action is paramount and it rose more than 10% last week on firm volume and is following through to start this week up better than 2%. 

Recent Examples:

  • The oil and gas midstream plays are coveted for their dividends and some act well in regard to PRICE as well. ET is climbing above the very round 10 number shedding its single-digit status for the first time since late July. It still trades 13% off highs made on 6/14. LNG CLOSED above the very round par number Monday as it extends its winning streak to ten sessions. Put a G in front of the last symbol, and GLNG is moving rapidly toward a cup base pivot of 14.12 (CLOSED Monday with a bearish dark cloud cover candle). Below is another player in the group in OKE, that like ET pays a dividend better than 6%, and how it appeared in our 9/20 Energy Note. We know that leading stocks will offer add-on buy points on the way UP, and Monday the stock did just that breaking above a short bull flag formation pivot just below the round 60 number, although it CLOSED with a bearish shooting star candle. Look for a potential measured move to 68.

Special Situations:

  • Oil and gas exploration play higher by 74% YTD and now 8% off most recent 52 week highs.
  • Looking for fourth consecutive WEEKLY CLOSE above round 40 number. Strong volume accompanied 4 week winning streak weeks ending between 8/27-9/17 that advanced by a combined 43%.
  • Back-to-back positive earnings reactions up 10.3 and 5.7% on 8/6 and 5/13.
  • Enter with buy stop above bull flag pattern.
  • Entry CRC 42.25.  Stop 39.50.

  • Oil and gas exploration play higher by 234% YTD and 386% over last one year period. Dividend yield of .2%.
  • Last week rose 18% in second-best WEEKLY volume in 7 months. Since start of July has been digesting big 22 of 33 week winning streak between weeks ending 11/13/20-6/25 that rose 424.1% top to bottom of the range.
  • Consecutive earnings gains of 4.6 and 6.1% on 7/28 and 4/29 after losses of .5 and 14.7% on 2/24 and 10/28/20.
  • Enter on pullback into recent cup base breakout.
  • Entry MTDR 39.50.  Stop 37.

  • Oil and gas play higher by 128% YTD and 221% over last one year period. Dividend yield of 1.8%.
  • Name right 52-week highs, and traded with a 4 handle last March. Higher by a combined 24% the last 2 weeks, and both CLOSED right at top of WEEKLY range.
  • Earnings mostly lower with 3 straight losses of .4, 7.6, and 5.3% on 5/6, 1/28, and 11/5/20 (recent gain of 5.7% on 8/5).
  • Enter on pullback into cup base breakout.
  • Entry MUR 27.  Stop 25.

Good luck.

Entry summaries:

Buy stop above bull flag pattern CRC 42.25.  Stop 39.50.

Buy pullback into cup base breakout MTDR 39.50.  Stop 37.

Buy pullback into cup base breakout MUR 27.  Stop 25.

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Exploration Excellence:

  • While many like to play the mean reversion game, I prefer to buy strength. In my opinion trading instruments act both weak and strong for a reason. Of course, it is not always known why, but the interpretation is seen in PRICE action. Looking at the major S&P sector leaderboard on a YTD basis energy should come out on top, barring some very heavy Q4 weakness as the XLE is up 50%, and its next closest competitor in the XLF is higher by 30%. Peering deeper into the energy arena the two largest sub-sectors are exploration and equipment, via the XOP and OIH. Both are up well over 100% YTD, not a typo, but the XOP has been acting better as of late, especially during the summer softness in energy. On a 1 and 3 month look back period the XOP is up 20 and 4% respectively while the OIH has gained 12% over the last one month, and is DOWN 7% over the last 3 months. As the XOP grapples with the very round par number and trades just 1% off recent 52-week highs (ETF was over 300 in early 2014) the OIH is 15% off its peak made in June. Devote your capital to where it is treated best. That means exploring the leading E&P names. 

South American Leadership:

  • Within the energy space, there are a few big players south of the border. Of course, there is the privately held Pemex in Mexico but let's take a look at three recognizable names in South America. The largest is PBR which is actually lower by 4% YTD. Compare that with YPF which is UNCH in 2021, and then the chart below of EC has advanced 15% thus far this year. PBR has a decent look to it as it drills, pun intended, its 200 day SMA with a focus in the near term on a double bottom pivot of 11.36. We focus on leadership here, and the EC chart has the nicest complexion of the three. In mid-September it touched its rising 200 day SMA for the seventh time since February, dispelling my belief that the more times a line is touched the weaker that support becomes. I would prefer the right side of the base to develop a little more gradually, but PRICE action is paramount and it rose more than 10% last week on firm volume and is following through to start this week up better than 2%. 

Recent Examples:

  • The oil and gas midstream plays are coveted for their dividends and some act well in regard to PRICE as well. ET is climbing above the very round 10 number shedding its single-digit status for the first time since late July. It still trades 13% off highs made on 6/14. LNG CLOSED above the very round par number Monday as it extends its winning streak to ten sessions. Put a G in front of the last symbol, and GLNG is moving rapidly toward a cup base pivot of 14.12 (CLOSED Monday with a bearish dark cloud cover candle). Below is another player in the group in OKE, that like ET pays a dividend better than 6%, and how it appeared in our 9/20 Energy Note. We know that leading stocks will offer add-on buy points on the way UP, and Monday the stock did just that breaking above a short bull flag formation pivot just below the round 60 number, although it CLOSED with a bearish shooting star candle. Look for a potential measured move to 68.

Special Situations:

  • Oil and gas exploration play higher by 74% YTD and now 8% off most recent 52 week highs.
  • Looking for fourth consecutive WEEKLY CLOSE above round 40 number. Strong volume accompanied 4 week winning streak weeks ending between 8/27-9/17 that advanced by a combined 43%.
  • Back-to-back positive earnings reactions up 10.3 and 5.7% on 8/6 and 5/13.
  • Enter with buy stop above bull flag pattern.
  • Entry CRC 42.25.  Stop 39.50.

  • Oil and gas exploration play higher by 234% YTD and 386% over last one year period. Dividend yield of .2%.
  • Last week rose 18% in second-best WEEKLY volume in 7 months. Since start of July has been digesting big 22 of 33 week winning streak between weeks ending 11/13/20-6/25 that rose 424.1% top to bottom of the range.
  • Consecutive earnings gains of 4.6 and 6.1% on 7/28 and 4/29 after losses of .5 and 14.7% on 2/24 and 10/28/20.
  • Enter on pullback into recent cup base breakout.
  • Entry MTDR 39.50.  Stop 37.

  • Oil and gas play higher by 128% YTD and 221% over last one year period. Dividend yield of 1.8%.
  • Name right 52-week highs, and traded with a 4 handle last March. Higher by a combined 24% the last 2 weeks, and both CLOSED right at top of WEEKLY range.
  • Earnings mostly lower with 3 straight losses of .4, 7.6, and 5.3% on 5/6, 1/28, and 11/5/20 (recent gain of 5.7% on 8/5).
  • Enter on pullback into cup base breakout.
  • Entry MUR 27.  Stop 25.

Good luck.

Entry summaries:

Buy stop above bull flag pattern CRC 42.25.  Stop 39.50.

Buy pullback into cup base breakout MTDR 39.50.  Stop 37.

Buy pullback into cup base breakout MUR 27.  Stop 25.