The Best and Worst Names in the Energy Sector
While the choice for the best was easy, the competition for the worst was fierce.
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Energy has been one of the best-performing sectors of 2024. Indeed, the bellwether S&P Energy Sector Fund XLE gained 23% from mid-January (point A) through mid-April (point B).
Is the energy sector’s bullish run coming to an end? Over the past month, this sector has formed a lower high (LH) and a lower low (LL). On Thursday, XLE closed at its lowest level since late March.
Since the selloff began, XLE’s volume has been considerably higher on negative days, and lower on positive days (shaded yellow). The ETF, which reached a 52-week high just last month, now has a tenuous grasp on its 50-day moving average (blue).
The sector’s recent activity is heavily influenced by the price of crude oil, which declined sharply this week. The threat of a widening conflict in the Middle East remains, but two weeks after Israel and Iran traded blows, tensions appear to have eased somewhat.
Despite its recent pullback, West Texas Intermediate crude remains above its bullish trendline (black dotted line), at least for now. The trendline has been in effect since mid-December. If trendline support holds, stocks in the energy sector should stabilize.
Let’s go to the charts to see which names in the energy sector have the best — and worst — charts right now.
Hess Is Best
When it comes to relative strength in the energy sector, Hess Corp. HES is the best stock in the group. Hess has largely shrugged off the pullback in energy, as well as weakness in the broader market.
The stock continues to trend higher, and remains above its 50-day (blue) and 200-day (red) moving averages. Hess’ bullish trendline (black dotted line) has been intact since mid-January.
In October, Chevron CVX agreed to acquire all outstanding shares of Hess for about $53 billion. However, that deal may be in doubt, due to a legal dispute over Hess’ assets in Guyana. If the Chevron-Hess deal falls through, another suitor, possibly Exxon Mobil XOM, may appear.
A Fierce Fight for the Worst
While Hess was an easy choice for the best chart, the competition for the worst chart was fierce. The dubious award goes to Halliburton Inc. HAL, which has fallen below its key moving averages and has broken its bullish trendline (black dotted line).
Runners-up include Phillips 66 PSX, Marathon Petroleum MPC, and Conoco-Phillips COP.
The key going forward for this sector is crude oil. Will it hold above its ascending trendline? If that line breaks, expect further downside from these names.
At the time of publication, Ponsi had no positions in any securities mentioned.
