The team here at All Star Charts is very bullish on the Oil & Gas Exploration & Production sector as discussed here (premium). Before we get into how we’re going to play it, here’s a little background to give color for our optimism for the opportunity we see, from our kid off the bench Tom Bruni:
After a long period of indecision and relative underperformance, the Oil & Gas Exploration & Production ETF $XOP is finally breaking out to the upside and confirming a new long-term uptrend. Many stocks within the sector have spent years making no progress and are now finally breaking out to the upside. Normally we focus on sectors showing relative strength and hitting new all-time highs like software (premium), but every sector has its day eventually (see retail) and it looks like these energy names are finally ready to participate in the broader market’s rally.
As Tom mentioned above, we normally like to play where relative strength and established trends work as tailwinds to help along our trades, but sometimes you gotta take a chance on situations that are showing signs of being the next market leader. Like that kid in the minor leagues that gets a call up when the team is struggling, sometimes you just have to go deeper to find the next clubhouse leader.
Here’s how we’re going to step up with the sector leader (in our opinion):