Crude oil took a well deserved breather last week. Since notching a new 52-week high north of $50, prices have receded 6% amid mild volume. And energy stocks are falling in-kind. Blame it on profit-taking, short-sellers, or whatever other hobgoblin tickles your fancy.
Perhaps the newfound strength in precious metals is stealing some would-be buyers of crude. If momentum is what they’re seeking, gold and silver had both in spades last week.
Unless you’re already long energy stocks, the current pullback is a welcome development. It’s setting up low-risk entries in a number of oil companies.
And if you’re worrying that last week was the last gasp of the oil bull, don’t. Picking tops is a fool’s errand. Unless greater deterioration develops, this oil dip is a buy, baby.
Here are three energy stocks boasting dips worth bragging about.
Energy Stocks to Buy: Halliburton Company (HAL)
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Halliburton Company (HAL) tops the list with one of the best setups in the entire market. Really, it’s a beauty. Rookie traders attempting to master the bull retracement pattern ought to print this bad boy out and stick it on the fridge, because it’s textbook.
We begin with an uptrend with increasing momentum. The last upswing boasted outsized bullish candles with high volume to boot. Momentum indicators like the RSI tagged new highs across the board, showing this wasn’t your garden variety, weak-sauce rally. No, buyers wanted in and they weren’t afraid to pay up.
The two days of selling ushering HAL stock into the weekend saw light volume, suggesting sellers lacked any kind of conviction to worry about.
Buy the Aug $44 calls to profit from Halliburton’s next advance.
Energy Stocks to Buy: Schlumberger Limited. (SLB)
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Fellow oil service stock, Schlumberger Limited. (SLB) also made today’s list. Halliburton and SLB have always boasted a strong correlation, so it’s no surprise that last week’s dip brought both of them to low-risk buy areas.
While I’d like to say Schlumberger’s stock chart is the spittin’ image of HAL, there is one minor difference: The advance in SLB stock was stymied by a stubborn resistance level at $82.
And while the stock made a higher pivot high, it failed to take out this intermediate-term ceiling. Which isn’t a deal-breaker mind you. The pullback in SLB still looks attractive here and, given enough time, it should be able to breach $82.
So worry not, SLB bulls.
Buy the Aug $77.50 calls. The risk is limited to the initial debit, the reward is unlimited.
Energy Stocks to Buy: Anadarko Petroleum Corporation (APC)
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Anadarko Petroleum Corporation (APC) rounds out our list of dip-buying beauties. The exploration and production company recently reclaimed its 200-day moving average for the first time in a long time.
With last week’s pullback, APC stock is now retesting the long-term average to see if it’ll switch teams and start providing support.
So far in early trading, things look promising. Really, the setup in APC is simple: It’s an uptrend, now north of all major moving averages, that has retreated to a potential support area. Dip buyers should come out of the woodwork here to kick off the energy stock’s next advance. Make sure you’re one of them.
Buy the APC Aug $52.50 call.
As of this writing, Tyler Craig did not hold a position in any of the aforementioned securities.
