Charts Like 3 Stocks in Oil & Gas E&P

Yesterday the Fed announced that it will not be raising the fed funds rate this month, and probably not anytime soon. If you pay attention to what the Fed has been doing over the past several months (actually, the past several years), you'll quickly realize that its words aren't exactly in sync with its actions. On a very regular basis, the words written and spoken are fairly hawkish. Not yet, but we could hike at any time! Don't get complacent, because we just might pull the trigger next month! We see the lousy data, but we think it's going to get better, so watch out! Don't get complacent! Of course, the actions taken are virtually non-existent. One token hike in December and it's been all bluster since then. All talk and no action. It's one big ball of confusion, wrapped in a riddle. During times like this, it's really important to just focus on what's working rather than who's talking. And if you look at the energy sector, many of those stocks are working, even though they're not supposed to be working. After all, oil has peaked at $50 a barrel and the dollar is going to stay strong, though opinions certainly vary on that. Let's look at a few charts in a sector that isn't supposed to be working. The oil and gas exploration and production sector is actually working very well. This daily chart shows a recent crossover of the 200-day moving average by the 50-day moving average, a golden cross (though it doesn't quite meet all the parameters of that overused term). With prices now printing higher lows and holding above the 50-day moving average, I think the SPDR S&P Oil and Gas Exploration and Production ETF (XOP) works right here, as long as you keep a stop just below the 200-day moving average. If the 200-day moving average doesn't hold up as support, this isn't a sector where you want to be. Let's look at a few stocks in the sector. Denbury Resources (DNR) has been consolidating at around $4 for the past several weeks. The stock has been forming a symmetrical triangle, which is a continuation pattern. As with so many other stocks in this sector, the 50-day moving average defines support. The trading range has been getting increasingly narrow, which sets up a volatility squeeze. If the stock closes above current resistance, I think DNR is a buy. This daily chart of Southwestern Energy (SWN) shows a double bottom from December and March, when the stock tested $5. The second rebound in early March followed a high-volume selloff that ultimately marked the end of the downtrend. Since printing that second low in early March, SWN has been moving higher in a series of higher highs and lows. This latest pullback to $13 is testing the 50-day moving average. I think you can buy right here. Just focus on the 50-day moving average. That key indicator has to hold as support. If it breaks down, then maybe SWN isn't in an uptrend after all. Whiting Petroleum (WLL) has been moving higher since the late-February bottom. Notice how high the trading volume was on that March rally? Very impressive -- that's institutional buying. Since that rally, the stock has been trading in an uptrending channel. This recent cross above the 200-day moving average is bullish and makes any pullback a new buying opportunity. It's just a matter of time before we see a 50/200-day crossover in WLL. As long as the trendline I've drawn in the chart holds up as support, WLL works. One note of caution, this is a very uncertain market. It's great to have conviction in your trades, but you've got to have a risk management plan in place. Know where you will get out if the stock does something you don't expect. Define your risk, and then don't change the definition. Be careful out there.

Charts Like 3 Stocks in Oil & Gas E&P

The oil and gas exploration and production sector is actually working very well.

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