The Energy Select Sector SPDR (ARCA:XLE) is the top performing sector over the last week, as energy stocks have seen some impressive gains. Energy is also the second best performer over the last month. According to asset rotation models, Energy typically does best near, at, or slightly after stock market tops. It is too early to say if the energy sector out-performance is an ominous sign for stocks as a whole; all that is clear right now is that the energy sector is one place to look for some great trading opportunities. Here are four hot energy stocks to keep an eye on.
Petroleo Brasilerio (NYSE:PBR) is in a multi-year downtrend, but has seen a strong rally in the last half of March. Over the last week the stock is up 8.63%. A rise above the April 1 high at $13.29 is likely to spark even further buying. If the price drops below $12.80 there could be a deeper pullback into the $12 to $11.70 area, although that would still be a short-term buying opportunity. Upside target is between $14.90 and $15.20. At the target area the price reaches long-term trendline resistance, and there isn't evidence yet of a full-fledged trend reversal. This is a bear market rally at this point.
Targa Resources Partners (NYSE:NGLS) is in a long-term uptrend since late 2008, when it traded near $6. April 1 it closed up 4.99% to $59.07, a nearly 10-fold advance in just over five years. After moving predominately sideways through much of 2013, the stock appears to be breaking higher once again. Short-term traders can step in to partake in the volatility, while those seeking slightly longer-term positions will want to wait for a pullback into the $56 to $55 region. The range breakout provides an upside target of $60, with $62 to $63 being the next likely target region.
Ultra Petroleum (NYSE:UPL) is in a long-term down trend, but has formed a saucer bottom on the weekly chart as it pushes higher--gaining 7.48% over the last week. The price has already cleared significant resistance between $24 and $25, indicating the long-term trend may be reversing to the upside. Overall the rise has been choppy, so finding an entry point at a lower a price in the near future is probable. Look for an entry between $26 and $25, for long-term trades. While it is possible the price could retreat to minor trendline support at $23, this may be wishful thinking at the moment as the price picks up steam. The next major hurdle for the stock will be breaking through resistance (old support) above $38.
InterOil Corp (NYSE:IOC) has been range-bound since 2010, covering a wide area between $106.44 and $31.18. In January the stock appeared to bottom, after bouncing off the very wide support area at the bottom of the range. It has been moving higher since, tacking on 6.75% this week. After a very big gap down in December, there is very little resistance standing in the way of the price continuing to advance. Upside price target is between $84 and $88, as that is where the price may experience selling pressure due to the long-term range. A 2014 trendline signals entries between the current price and $63.
The Bottom Line
Energy is doing well over all, and these energy stocks are helping push the sector higher. While they all belong to the same sector, they are part of different industries and have their own histories. Some are showing long-term reversal signals, while others are geared for short-term trading. Stick to those stocks that suit your trading style. Control risk and manage position size so that one losing trade doesn't significantly impact your trading capital.