Hardly a day has gone by lately without a major price swing for energy stocks — both higher and lower — as oil and gas prices continue to fluctuate. As a trader, it can be hard to know the best way to play this.
Is a bearish stance still the right one? Or is it a good time to try out a bullish trade?
That’s where technical analysis can come in very handy.
The Profit Scanner, powered by Recognia, scans more than 65,000 charts every day and has identified three stocks that are throwing off strong bullish signals.
Read on to learn the details and recommendations for exactly how to profit.
Newfield Exploration Co. (NYSE:NFX)
First up is Newfield Exploration Co. (NYSE:NFX), which (as the name suggests) focuses on exploration and production. Most E&P stocks have struggled in the current environment but not Newfield Exploration.
While the rest of the group is down about 3% in the last three months, NFX is up 3%, and has been racking up bullish signals since Jan. 30.
Feb. 25 was a particularly great session for NFX; Wall Street welcomed Newfield Exploration’s hedging efforts and the large boost to proven reserves, as outlined in the quarterly report. NFX stock enjoyed a heady gain of 13.7%.
As a result, the Profit Scanner found that NFX’s MACD, Commodity Channel Index and short-term “Know Sure Thing” all turned bullish on Wednesday. The Profit Scanner also confirmed a Bottom Triangle pattern in Newfield’s chart that carries 31% – 37% upside in the intermediate term.
The above chart of Newfield Exploration is a clear example of the pattern. The Bottom Triangle consists of two trendlines that converge as NFX stock makes lower highs and higher lows on falling volume.
Then Newfield Exploration stock breaks above the upper trendline on a noticeable increase in volume — a sign that the stock has made a bottom and reversed higher out of the prior downtrend. In this case, NFX’s breakout occurred on 8.9 million shares traded; that’s more than double its average trading volume, which helps validate the pattern.
As noted above, the Profit Scanner sees significant upside in NFX’s future: its target is $44 – $46 in the next 30 trading days.
Vanguard Natural Resources, LLC (NASDAQ:VNR)
Next we have another E&P name, Vanguard Natural Resources, LLC (NASDAQ:VNR). Like many of its fellow energy master limited partnerships (MLPs), VNR has had a rough go of it lately, but the Profit Scanner is currently bullish on this MLP.
VNR stock’s momentum indicator turned short-term bullish on Feb. 25, when the units closed 1.7% higher, and the chart also shows a bullish Flag pattern.
Essentially, the bullish Flag suggests that VNR stock has resumed a sharp rally after a brief pause. The bullish Flag is marked by two trendlines that are roughly parallel, often sloping downward against the prevailing trend, and is confirmed when the stock breaks above the upper trendline. You can see an example of this below, in Vanguard Natural Resource’s chart.
The Profit Scanner places an upside target for VNR at $22.50 – $23.50 (a 33% – 39% gain) in the next 12 trading days. Now, traders should note that there were a couple of short-term bearish signals for VNR as recently as Feb. 23, from the MACD and Williams %R oscillators.
More conservative traders may want to consider putting tight stops on their VNR trades, which Profit Scanner places at a close below $16.12.
Synergy Resources Corp (NYSEMKT:SYRG)
Synergy Resources Corp (NYSEMKT:SYRG), another E&P stock, is also looking very bullish. On Feb. 25, both the MACD and the Williams %R turned short-term bullish…plus, SYRG shares crossed above both the 21-day and the 200-day moving averages, as you can see in the chart below.
For those who are less familiar with technical analysis, moving averages are commonly used by chartists because they help “smooth out” the noise of day-to-day volatility and make the underlying trend easier to spot. Their implications depend on the timeframe used for the moving average: when the stock overtakes the 21-day m.a., that’s a short-term bullish signal, and overtaking the 200-day m.a. is a long-term bullish signal.
The short-term signals for SYRG have been nothing but bullish lately, but those looking for a stock to buy and hold should note that SYRG did have a long-term bearish signal back on Feb. 20, when SYRG crossed below its 50-week m.a.
The Profit Scanner places a medium stop on SYRG at a close below $9.65, about two dollars (17%) below current prices.
Profit Scanner powered by Recognia can help traders of all levels uncover these signals to determine the best timing to buy. Or use Profit Scanner’s technical insight to validate your own trading ideas. See how easy this powerful tool is to help you uncover hidden opportunities in the market.