Volatility has returned to U.S. equity markets, with the Dow Jones Industrial Average falling as much as 300 points before recovering back to the unchanged line in mid-day trading on Wednesday. Investors were spooked by soft housing data showing that buyers are stepping back — despite an extremely strong labor market — as interest rates rise.
Energy is one of the weaker areas of the market, suffering from a dramatic pullback in crude oil as worries over a showdown with Saudi Arabia over the death of a journalist are seemingly blowing over. As a result, the U.S. Oil Fund (NYSEARCA:USO) is threatening to fall below its 50-day moving average for the first time since early September.
That, in turn, is pushing the Energy Select SPDR (NYSEARCA:XLE) below its 200-day moving average for the first time since early April. A number of stocks in the sector are powering down and are immediate sells. Here are seven energy stocks to sell:
ConocoPhillips (COP)
ConocoPhillips (NYSE:COP) stock is at risk of violating its seven-month uptrend channel as it tests a move below its 50-day moving average. Watch for a decline to test critical support at its 200-day moving average, which would be worth a decline of more than 10% from here. The company was recently downgraded by analysts at Goldman Sachs.
The company will next report results on Oct. 25, before the bell. Analysts are looking for earnings of $1.13 per share on revenues of $9.5 billion. When the company last reported on July 26, earnings of $1.09 missed estimates by a penny on revenues of $10.05 billion.
Continental Resources (CLR)
Continental Resources (NYSE:CLR) stock is threatening to fall below its 200-day moving average and thus confirm a nasty looking head-and-shoulders reversal pattern that traces a drop all the way down to $48, which would be worth a loss of 20% from current levels. The company was recently downgraded by analysts at BMO Capital Markets.
The company will next report results on Oct. 29, after the close. Analysts are looking for earnings of 80 cents per share on revenues of $1.2 billion. When the company last reported on Aug. 7, earnings of 73 cents per share beat estimates by 2 cents on a 71.9% rise in revenues.
Diamond Offshore Drilling (DO)
Diamond Offshore Drilling (NYSE:DO) stock is rolling lower after bonking on resistance going back to April near the $21-a-share level. That is setting up a violation of the 50-day and 200-day moving averages and a test of the August/September lows near $16, which would be worth a loss of roughly 14% from here. The company has been hit with a number of analyst downgrades in recent weeks from the likes of Johnson Rice and JPMorgan.
The company will next report results on Nov. 5, before the bell. Analysts are looking for a loss of 38 cents per share on revenues of $280.6 million. When the company last reported on July 30, a loss of 33 cents per share beat estimates by 5 cents on a 32.7% decline in revenues.
Apache (APA)
Apache (NYSE:APA) shares are threatening to fall below their 200-day moving average for the first time since May, setting up a test of support near the $39-a-share level, which would be worth a drop of more than 9% from here. The company was recently downgraded alongside Hess (NYSE:HES) by Piper Jaffray analysts in late September.
The company will next report results on Oct. 31, after the close. Analysts are looking for earnings of 44 cents per share on revenues of $1.9 billion. When the company last reported on Aug. 1, earnings of 50 cents per share beat estimates by 11 cents on a 39.4% rise in revenues.
Hess (HES)
Hess stock has fallen more than 13% from its early October high to test the lows set in August and September. If support near $60 doesn’t hold, a decline all the way back to the levels seen in March could be on the table, which would be worth a further loss of more than 20% from here.
The company will next report on Oct. 31, before the bell. Analysts are looking for a loss of 8 cents per share on revenues of $1.6 billion. When the company last reported on July 25, a loss of 23 cents per share beat estimates by 5 cents per share on a 30.3% rise in revenues.
National Oilwell Varco (NOV)
National Oilwell Varco (NYSE:NOV) stock is falling below its 200-day moving average, down more than 14% from the high set in late July, testing levels not seen since May. Analyst coverage has been positive as of late, with an initiation at neutral by Morgan Stanley and an upgrade to buy from Johnson Rice in recent weeks. But the price of underlying crude oil overrides all that, and with prices falling, NOV shares are weakening.
The company will next report results on October 25 after the close. Analysts are looking for earnings of 12 cents per share on revenues of $2.2 billion. When the company last reported on July 26 earnings of 6 cents per share beat estimates by 4 cents on a 19.7% rise in revenues.
Phillips 66 (PSX)
Phillips 66 (NYSE:PSX) stock is testing support at its 200-day moving average and its June/July lows, setting up a decline that unwinds the April-May uptrend and could result in a test of the March/April lows. That would be worth a loss of roughly 16% from here. Refinery stocks normally benefit from cheaper crude oil prices, as it lowers feedstock costs. But sympathetic selling often follows no logic, setting up disappointment for shareholders here.
The company will next report results on Oct. 26, before the bell. Analysts are looking for earnings of $2.44 per share on revenues of $28.7 billion. When the company last reported on July 27, earnings of $2.80 beat estimates by 56 cents per share on revenues of $26.4 billion.
As of this writing, William Roth did not hold a position in any of the aforementioned securities.
