Things are looking up for some oil companies, and now may be the time to get in.
After trending lower since early June, WTI Crude Oil began to rebound in early August ever since it bounced off of the $39 level.
At current prices a bit over $44 per barrel, the commodity has gained more than 12% in just over a week, and that has led to some technical breakouts in a number of oil and gas companies.
Profit Scanner has identified three such stocks that are forecasting additional gains ahead, so let’s take a look to see which present the best trading opportunities in the sector right now.
Oil and Gas Companies Breaking Out: MV Oil Trust (MVO)
MV Oil Trust (NYSE:MVO) is a trust that receives royalty payments from the assets owned by the company’s partners, which include oil and natural gas properties located in the central region of the U.S.
While shares were devastated during the second half of 2015, there has been an equally remarkable turnaround effort over the past six months, as shown in the chart above.
Outlined in red, “Diamond” patterns usually form over several months in very active markets, and volume tends to remain high during the formation of this pattern. The Continuation Diamond (Bullish) pattern forms because prices create higher highs and lower lows in a broadening pattern. Then, the trading range gradually narrows after the highs peak and the lows start trending upward.
The technical event triggers when prices break up and out of the diamond formation to continue the prior uptrend, and that is considered a bullish signal in this case.
Profit Scanner is looking for price to reach a conservative $6.90 per share over the intermediate term, indicating that we should expect new highs this year. If realized, investors would see gains of up to 12.74%.
Oil and Gas Companies Breaking Out: Baytex Energy Corp (USA) (BTE)
Baytex Energy Corp (USA) (NYSE:BTE) is in the business of acquiring, developing and holding interests in petroleum and natural gas properties in Canada (Alberta and Saskatchewan) and in the United States (Texas).
Shares of BTE formed a complex bottom over the past year, but it looks as though the worst may be over for shareholders.
The stock is currently breaking out of what technical analysts refer to as a bullish “Continuation Wedge,” which should be considered a bullish signal in this case. It indicates a likely continuation of the current uptrend for the stock going back to the lows set in January of this year.
The price formation consists of two converging trend lines that are slanted downward. Unlike the Triangles where the apex is pointed to the right, the apex of this pattern slants downwards at an angle. This is because prices edge steadily lower in a converging pattern.
In other words, there are lower highs and lower lows. A bullish signal occurs when prices break above the upper trendline, which is exactly what we’re seeing in the chart above.
Profit Scanner not only alerted us to the breakout of the two-month long pattern, but now gives us a target price projection as well, hinting that shares should climb to $7.40 on the conservative end. With the price of BTE trading for just $4.97 as of this writing, investors stand to gain a whopping 48.89% in the months ahead.
Oil and Gas Companies Breaking Out: Genie Energy Ltd (GNE)
Genie Energy Ltd (NYSE:GNE) operates retail energy providers and energy brokerage and marketing services, resells electricity and natural gas to residential and small business customers and operates an oil and gas exploration project.
Although the stock has fallen from lofty $14+ heights set back in October 2015, there are technical reasons as to why investors should take another look at the stock.
More recently, GNE has broken up and out of a bullish “Diamond Bottom” pattern (see chart above), indicating a possible reversal of the current downtrend to a new uptrend. Diamond patterns usually form over several months in very active markets and volume remains high during the formation of this pattern.
Profit Scanner is currently projecting a climb to $7.80 per share on the conservative end. With GNE trading for $7.01, investors are likely to bid price higher in an effort to pocket 11.26% gains on the trade.
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.