The recovery in oil prices is lengthening its stride. The same can be said about the nascent rebound in energy stocks. All told, crude light is up 37% since bottoming mid-year at $42.05. Its trend is now pointing higher across all time frames. Yes, even the sluggish 200-day moving average is beginning to ascend. And that’s saying something.
Oil’s bullish behavior is breathing new life into beaten-down energy stocks. Remember, the entire energy sector was locked in a nasty downtrend for the first eight months of the year. That means this bull move has been a long time coming and the energy patch is one of the few places that you can find cheaper securities.
Last week’s price jump in the Energy Select Sector SPDR (ETF) (NYSEARCA:XLE) is giving renewed reason to scour the sector for trade ideas. It turns out there are three such gems on the cusp of breakouts that will hopefully deliver eye-popping gains.
Let’s take a look.
3 Energy Stocks on the Move: Exxon Mobil Corporation (XOM)
We begin with an oil giant, the indisputable king of the space – Exxon Mobil Corporation (NYSE:XOM). The past quarter has treated XOM stock well, returning the behemoth to the top side of every major moving average.
And now, its testing critical resistance at $84. This zone has kept a lid on Exxon for virtually the entire year. Indeed, $84 is where rallies have gone to die.
But this time could be different. With tax cuts and year-end seasonality at its back, the current XOM stock rally may succeed where so many of its predecessors have failed.
Wait for a close above $84, then buy Feb $82.50 calls.
3 Energy Stocks on the Move: Marathon Oil Corporation (MRO)
Our next pick offers decidedly more volatility than stodgy old Exxon. Since bottoming in August shares of Marathon Oil Corporation (NYSE:MRO) are up 43%. They now sit well above the 200-day moving average in a healthy, if young, uptrend.
What’s more, volume patterns suggest major accumulation transpiring beneath the surface that should continue to bode well for MRO moving forward.
Over the past three weeks, MRO has formed a sideways base that is on the verge of completion. Watch for a break over $15.30 in the coming days, then buy the April $15 call options.
The prior resistance at $16.50 is a logical target for this trade.
3 Energy Stocks on the Move: Carrizo Oil & Gas Inc (CRZO)
Rounding out today’s trio is perhaps the most volatile pick of all, Carrizo Oil & Gas Inc (NASDAQ:CRZO). CRZO stock is popping above the 200-day moving average this morning and on the verge of clearing a key resistance level.
Its behavior has been bullish ever since September. Buyers continue to gobble up dips and the 20-day and 50-day moving averages are have provided support multiple times along the way.
Over the past month, CRZO shares have traded in a sideways range which now looks ready to break. The high volatility of CRZO options makes it a prime candidate for selling puts. Sell the Jan $17.50 put for 60 cents.
As of this writing, Tyler Craig didn’t hold positions in any of the aforementioned securities. Want more education on how to trade? Check out his trading blog, Tales of a Technician.
