Crude oil prices are up more than 10% in the last week, which has helped pull energy stocks a little further out of the doldrums.
And further bolstering the case for crude? Nomura’s head of Asia oil research, Gordon Kwan, believes oil is poised for a breakout from here, to $70 by next year and $80 by 2016.
In this environment, Profit Scanner is seeing several buy opportunities.
Read on for the details of three energy stocks whose charts are looking particularly bullish right now — an alternative-fuel dealer, and two oil-and-gas plays with heavy interest in South America.
Energy Stocks About to Pop: Clean Energy Fuels Corp (CLNE)
Clean Energy Fuels Corp (NASDAQ:CLNE), so-called because it provides natural gas fuel, stations and related services to operators of transport vehicles, as an alternative to gas and diesel. On April 10, Profit Scanner determined that CLNE had just made a head-and-shoulders bottom, implying that the stock is a strong buy at current levels.
This chart pattern is one of the most popular among traders because it is considered one of the most reliable — and is also fairly easy to spot. The head-and-shoulders bottom occurs after a significant downtrend and consists of three successive declines, the lowest of which is in the middle (the “head”) and is flanked by two higher lows at about the same level (the “shoulders”). When you look at the trading volume, you’ll see the highest volume on the first two declines, then falling volume through the right shoulder. Then the stock breaks above the “neckline” (drawn between the two highs) on a big uptick in volume, confirming the reversal higher.
This particular bottom is a long-term bullish signal, and Profit Scanner is expecting CLNE shares to reach the $8.10-$8.60 level in the next 138 trading days.
Also on April 10, Clean Energy’s Commodity Channel Index turned bullish as well … implying that CLNE could make a great short-term trade in addition to the long-term play.
Energy Stocks about to Pop: Petroleo Brasileiro Petrobras SA (ADR) (PBR, PBR.A)
Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR, NYSE:PBR.A) also put in a head-and-shoulders bottom last week; in this case, the Profit Scanner is looking for PBR to reach $9.10-$9.50 in the next 46 trading days.
Since that signal on April 9, the Brazilian oil-and-gas giant enjoyed a series of additional bullish events. On April 10, PBR’s Commodity Channel Index and Momentum indicators both turned short-term bullish, and the stock crossed above its 21-week moving average. Then, on April 14, there was a bullish double moving average crossover.
Moving averages are another common tool in technical analysis because they help traders look past day-to-day price swings and identify an overall trend. They can be plotted over just about any time period, and when a faster MA crosses above a slower MA, it implies that the stock is trending higher. Here, it was PBR’s 21-day MA that crossed above the 50-day MA, a short-term bullish signal.
You can see both the crossover and the head-and-shoulders bottom on the above chart.
Energy Stocks About to Pop: Gran Tierra Energy Inc. (GTE)
Last but not least is Gran Tierra Energy Inc. (NYSEMKT:GTE), another oil-and-gas company operating in South America (but headquartered in Canada). On April 13, the shares broke out of a previous trading range to confirm a double bottom.
This pattern is similar to the head-and-shoulders bottom, but (as you might guess) it consists of just two lows. They occur during a downtrend and hit at roughly the same level as the stock fails to break above support. When it finally does, breaking upward above the highest high, it implies that the shares have reached a bottom and should trend higher from here.
Like CLNE and PBR, the Profit Scanner sees plenty of potential upside for GTE. Specifically, it’s looking for a rally to $3.85-$4.05 in the next 60 trading days — a 12%-17% gain from current levels.
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.