From the plunging price of natural gas to the controversy of
over the XL pipeline to tensions with oil-producing Iran, the
market for energy and energy stocks remains a place of potential
opportunity for short-term traders and active investors who
participate with a quantified, data-driven discipline.
As far as we're concerned, that quantified, data-driven
discipline has at its core the time-tested concept of buying
weakness and selling strength. And whether we are talking about the
recent short-term pullback in stocks like Lions Gate Entertainment
(read our article about Lions Gate below, or sell offs in oil and
gas stocks like those in today's report, the plan for trading and
investing profits remains the same.
To that end, let's take a look at a trio of energy stocks that
have begun to trade at levels were buyers have tended to come off
the sidelines, bidding shares higher.
Trading lower for two days in a row, and four out of the past
six, shares of
) have slipped to new, two-week lows ahead of trading on Thursday.
The pullback in the stock marks BP's first close in technically
in almost two months. Then, a two-day pullback led to a two-day
bounce in BP of more than 5%.
BP has a positive edge in the short-term of just under half a
percent, and a neutral, 6 out of 10, rating.
) have many of the same characteristics in common with BP. CVX has
also pulled back for the past two consecutive sessions as part of a
broader sell-off that has taken the stock lower for four out of the
last six trading days. Also, Chevron has a positive edge of under
half a percent and 6 out of 10 ratings. Like BP, Chevron likely
will require additional selling before attracting significant
buying enthusiasm. It took four oversold closes in a row in late
January before buyers were coaxed off the sidelines and into the
market during Chevron's last big correction. The stock then gained
nearly 4% over the next four days.
Another stock that has experienced aggressive selling of late is
). Shares of VLO had pulled back for three days in a row heading
into Wednesday's trading and, in moving lower intraday, are headed
for their second consecutive close in technically oversold
territory since the stock climbed back above its 200-day moving
average in the second half of January.
With a positive edge in the short-term of more than 1% and a
"consider buying" rating of 9 out of 10
, Valero is not only one of the highest rated oil stocks in its
group. Valero's 9 out of 10 ratings also makes the stock one of the
highest rated in our database of thousands of stocks heading into
trading on Thursday.
As always, traders looking to avoid single stock risk may want
to consider any one of a number of oil stock exchange-traded funds
that have also traded lower and become short-term oversold in bull
market territory. These include the
Energy Select Sector SPDRS ETF
) and the
iShares S&P Global Energy Sector Index Fund
). Both XLE and IXC have closed down two days in a row, are
short-term oversold, and have
of just above and just under 1%, respectively.
If you are looking for a way to identify stocks BEFORE they
make their big move, then 7 Stocks You Need to Know is a great
place to start.
to read "Lion's Gate, Hunger Games and 7 Stocks You Need to
is Editor in Chief of TradingMarkets.com