Oil has been in the news — and volatile — of late. But to profit in today’s energy market, investors should hedge that bet in black gold within the broad-based industry. Trading Exxon Mobil (NYSE:XOM), SolarEdge Technologies (NASDAQ:SEDG) and Ballard Power (NASDAQ:BLDP) will add the right kind of fuel to your portfolio.
The price of oil has surged over the past two weeks on geopolitical threats. And then just as quickly, the commodity has collapsed as headlines and perceived risks lessen or turn into late-night financial news. Profiting from this market requires so much more than worrying about supply disruptions and the latest political news.
The fact of the matter is that electric vehicles from Tesla (NASDAQ:TSLA) or hybrids from Ford (NYSE:F) are home-grown proof oil is far from the end all, be all when it comes to energy stocks in today’s market.
Further, energy stocks beyond the oil patch and their implications on our lives doesn’t stop there either. Inside that house you call home, it’s quite likely that a large part of how you literally keep the lights on isn’t driven by fossil fuels, but by other newer and cleaner renewable sources.
Don’t get me wrong. Oil remains the 800 pound gorilla when it comes to energy stocks. The commodity is still everywhere, even in the clothes on our backs. And oil and gas giant XOM stock whose capitalization is $301 billion dwarfs the $6.1 billion valuation of First Solar (NASDAQ:FSLR) and is a Goliath in its own right within the solar market. But that’s good news too, right?
Energy Stocks to Trade: Exxon Mobil (XOM)
I would be remiss to discuss energy stocks without mentioning Exxon Mobil. That base has already been covered. But shares are also on my targeted list of energy stocks to buy and sell for good reason.
Not only is XOM stock the embodiment of an old-school mentality that energy stocks are all about oil, shares are in weak position on the price chart and are ready for shorting. Currently, Exxon Mobil is set up in a broadening pattern. This week XOM stock confirmed a bearish reversal and looks ready to reassert the downtrend within the larger price formation.
I’d suggest gaining short exposure using a reduced and limited risk vertical. Specifically, the April $67.50/$60 put spread for $1.85 looks well priced to take advantage of a third price break of longer-term support before shares challenge an initial downside target at XOM stock’s 62% retracement level and pattern support.
SolarEdge Technologies (SEDG)
Shares of FSLR may be largest in capitalization for energy stocks focused on solar power, but the top stock in today’s market among growth players is SolarEdge Technologies. Investor’s Business Daily ranks SEDG stock as the best-in-breed. And with a market cap of $4 billion, there’s plenty of upside for this up-and-comer.
Technically, SEDG has shown itself to be a solid performer on the price chart. Shares of this energy stock have also displayed a knack for building classic patterns and successfully testing key support levels.
With shares of this energy stock pulling back, and the stochastics just dipping into oversold territory, this is one name to watch for now. I’d look to buy SEDG stock as a weekly chart candlestick reversal pattern likely emerges over the next one or two weeks.
Ballard Power (BLDP)
I just discussed Wall Street’s disdain for stocks under $5. I also wrote those investors are far from being right 100% of the time. And for proton-based, fuel-cell manufacturer Ballard Power, this is great news on the price chart.
Shares of this $1.2 billion market cap energy stock have roared higher this year and are back above $5. More important, BLDP stock has also constructed a corrective cup-shaped base with handle. All told, today’s buyers have a couple of huge reasons to put this up-and-comer in the portfolio.
As with SEDG shares, I’m recommending to buy this energy stock on weakness, but that also require some price confirmation first. Again, a bottoming candlestick pattern on the weekly chart looks like a smart approach.
I’m also demanding BLDP stock maintains the integrity of the handle pattern above the base’s 62% Fibonacci level when making a purchase decision. This means shares could fall back under $5 but still be a good buy. And given the popularity of that price level, that could come in handy in avoiding being an easy mark for other market operators.
Investment accounts under Christopher Tyler’s management do not currently own positions in securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
