Drilling Down The Drillers:

  • The diverse energy space has been firing on all cylinders. This is the one major S&P sector where currently it is ok to purchase pullbacks, and maybe the financials. Coal was the star of the week with names like AMR BTU and CEIX all gaining between 15-18%. Integrated plays like TTE look good with a bull flag pattern, although earnings are on deck this week. PSX is approaching the very round 90 number once again and moves above that figure often go on to touch par and beyond. The drillers have been under the radar somewhat against exploration plays as seen on ratio chart below. That could be about to change. Some names are acting better than others and two that have recorded recent breakouts above cup with handles pivots are NBR and HP (116.97 and 31.34 respectively). Microcap play FET is acting well above both the very round 20 number and the 200 day SMA. The chart below of TDW recently broke above a cup base pivot of 13.65. Last week dropped 7%, forgivable after the week prior jumped almost 25% in the best WEEKLY volume in more than 10 months. I believe this name will touch the very round 20 number sometime later in 2022.

Small Is Beautiful:

  • The equipment services group is starting to perk up against the almighty XLE. Over the last one-year period, it has lagged by a double with the OIH gaining a respectable 32%, with the XLE jumping 63%. Sure the top-heavy XLE is dominated by CVX and XOM and with investors searching for yield, the XLE satisfies the thirst with a 3.4% payout (OIH pays .8%). Looking beyond the obvious powerhouses in HAL and SLB, some smaller cap stocks are making a name for themselves. WHD which we have profiled recently has outperformed those 2 aforementioned giants gaining 71% over the last one year time frame. It has now formed a bull flag formation right at the very round 50 number and a break above carries a measured move to 57. Below is the chart that is holding up well above the very round 10 number, and avoiding single-digit status. On its WEEKLY chart, it has the look of breaking above an inverse head and shoulders pattern with a downward slanting neckline. Also what should be admired is its relative strength this week up 8.2%, while peers SLB fell 2.9%, and HAL AND and ROSE by 1.8 and 1.5% respectively.

Recent Examples:

  • A strategy one should always apply is to seek out the generals in the strongest behaved sectors. There is no shortage of names that define leadership within energy. On a YTD basis stocks within exploration that have already gained at least 25% include APA PXD CNQ VNOM and the chart below of EOG and how it was profiled in our 1/24 Energy Note. We know many breakouts will be retested to prove their validity, and EOG did just on 1/24, following a cup base breakout pivot of 98.30 originally taken out on 1/11. It rapidly recovered that day CLOSING 6% off intraday lows and CLOSING above the very round par number as well. There is a quote, believe it's Walter Deemer, that states, if the train pulls back into the station and hangs around too long there is something wrong with the train. The stock rose nearly 20% from the suggested entry and now is a bit extended but this is an add-on when pullbacks occur.

Special Situations:

  • Exploration and production leader up 28% YTD and 175% over last one year period. Dividend yield of 1.4%.
  • Name 4% off multi-year highs and traded with a 6 handle in March 2020. Solid relative strength last week up 10.1% doubling XOP gain. The week prior rose 7.9% compared to XOP advance of 5.4%.
  • Earnings mixed with gains of 3.1 and 3% on 8/3 and 4/29 and losses of 5.5 and 4.3% on 11/2 and 2/17.
  • Enter on pullback into cup base breakout/gap fill.
  • Entry CLR 56.  Stop 52 (REPORTS 2/15 before open).

  • Integrated energy play higher by 29% YTD and 65% over last one-year period. Dividend yield of 1%.
  • Name just 1% off multi-year highs and rose 5.1% last week after prior week rose 3.8% in best WEEKLY volume in almost 2 years. Back to back WEEKLY CLOSES above very round 90 number (in 2021 there were 7 weeks above 90 intraweek with just one CLOSE above week ending 10/15).
  • Earnings mixed with losses of 4.1 and 5.5% on 1/26 and 10/27 and gains of 4.6 and 7.8% on 7/28 and 4/28.
  • Enter after bull flag breakout.
  • Entry HES here.  Stop 91.

  • Exploration play up 26% YTD and 175% over last one-year period. Dividend yield of .8%.
  • Name 3% off multi-year highs and since late July 2021 has fallen back-to-back weeks just on one occasion. Week ending 1/28 displayed strong relative strength up 10% in second-best WEEKLY volume in 11 months (XOP rose 5.4%).
  • Earnings reactions mostly higher up 3.5, .5 and 6.6% on 11/4, 5/6, and 2/25 (fell 1.5% on 8/5).
  • Enter on pullback into cup base breakout.
  • Entry PDCE 59.75.  Stop 55.

Good luck.

Entry summaries:

Buy pullback into cup base breakout/gap fill CLR 56.  Stop 52.

Buy after bull flag breakout HES here.  Stop 91.

Buy pullback into cup base breakout PDCE 59.75.  Stop 55.

This article requires a Chartsmarter membership. Please click here to join.

Drilling Down The Drillers:

  • The diverse energy space has been firing on all cylinders. This is the one major S&P sector where currently it is ok to purchase pullbacks, and maybe the financials. Coal was the star of the week with names like AMR BTU and CEIX all gaining between 15-18%. Integrated plays like TTE look good with a bull flag pattern, although earnings are on deck this week. PSX is approaching the very round 90 number once again and moves above that figure often go on to touch par and beyond. The drillers have been under the radar somewhat against exploration plays as seen on ratio chart below. That could be about to change. Some names are acting better than others and two that have recorded recent breakouts above cup with handles pivots are NBR and HP (116.97 and 31.34 respectively). Microcap play FET is acting well above both the very round 20 number and the 200 day SMA. The chart below of TDW recently broke above a cup base pivot of 13.65. Last week dropped 7%, forgivable after the week prior jumped almost 25% in the best WEEKLY volume in more than 10 months. I believe this name will touch the very round 20 number sometime later in 2022.

Small Is Beautiful:

  • The equipment services group is starting to perk up against the almighty XLE. Over the last one-year period, it has lagged by a double with the OIH gaining a respectable 32%, with the XLE jumping 63%. Sure the top-heavy XLE is dominated by CVX and XOM and with investors searching for yield, the XLE satisfies the thirst with a 3.4% payout (OIH pays .8%). Looking beyond the obvious powerhouses in HAL and SLB, some smaller cap stocks are making a name for themselves. WHD which we have profiled recently has outperformed those 2 aforementioned giants gaining 71% over the last one year time frame. It has now formed a bull flag formation right at the very round 50 number and a break above carries a measured move to 57. Below is the chart that is holding up well above the very round 10 number, and avoiding single-digit status. On its WEEKLY chart, it has the look of breaking above an inverse head and shoulders pattern with a downward slanting neckline. Also what should be admired is its relative strength this week up 8.2%, while peers SLB fell 2.9%, and HAL AND and ROSE by 1.8 and 1.5% respectively.

Recent Examples:

  • A strategy one should always apply is to seek out the generals in the strongest behaved sectors. There is no shortage of names that define leadership within energy. On a YTD basis stocks within exploration that have already gained at least 25% include APA PXD CNQ VNOM and the chart below of EOG and how it was profiled in our 1/24 Energy Note. We know many breakouts will be retested to prove their validity, and EOG did just on 1/24, following a cup base breakout pivot of 98.30 originally taken out on 1/11. It rapidly recovered that day CLOSING 6% off intraday lows and CLOSING above the very round par number as well. There is a quote, believe it's Walter Deemer, that states, if the train pulls back into the station and hangs around too long there is something wrong with the train. The stock rose nearly 20% from the suggested entry and now is a bit extended but this is an add-on when pullbacks occur.

Special Situations:

  • Exploration and production leader up 28% YTD and 175% over last one year period. Dividend yield of 1.4%.
  • Name 4% off multi-year highs and traded with a 6 handle in March 2020. Solid relative strength last week up 10.1% doubling XOP gain. The week prior rose 7.9% compared to XOP advance of 5.4%.
  • Earnings mixed with gains of 3.1 and 3% on 8/3 and 4/29 and losses of 5.5 and 4.3% on 11/2 and 2/17.
  • Enter on pullback into cup base breakout/gap fill.
  • Entry CLR 56.  Stop 52 (REPORTS 2/15 before open).

  • Integrated energy play higher by 29% YTD and 65% over last one-year period. Dividend yield of 1%.
  • Name just 1% off multi-year highs and rose 5.1% last week after prior week rose 3.8% in best WEEKLY volume in almost 2 years. Back to back WEEKLY CLOSES above very round 90 number (in 2021 there were 7 weeks above 90 intraweek with just one CLOSE above week ending 10/15).
  • Earnings mixed with losses of 4.1 and 5.5% on 1/26 and 10/27 and gains of 4.6 and 7.8% on 7/28 and 4/28.
  • Enter after bull flag breakout.
  • Entry HES here.  Stop 91.

  • Exploration play up 26% YTD and 175% over last one-year period. Dividend yield of .8%.
  • Name 3% off multi-year highs and since late July 2021 has fallen back-to-back weeks just on one occasion. Week ending 1/28 displayed strong relative strength up 10% in second-best WEEKLY volume in 11 months (XOP rose 5.4%).
  • Earnings reactions mostly higher up 3.5, .5 and 6.6% on 11/4, 5/6, and 2/25 (fell 1.5% on 8/5).
  • Enter on pullback into cup base breakout.
  • Entry PDCE 59.75.  Stop 55.

Good luck.

Entry summaries:

Buy pullback into cup base breakout/gap fill CLR 56.  Stop 52.

Buy after bull flag breakout HES here.  Stop 91.

Buy pullback into cup base breakout PDCE 59.75.  Stop 55.