With May crude oil futures tumbling into negative territory, energy is the talk of the day on Wall Street. With that in mind, let’s look at a few energy-focused top stock trades.
Top Stock Trades for Tomorrow No. 1: Energy Sector ETF (XLE)
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The Energy Select Sector SPDR ETF (NYSEARCA:XLE) is actually handling the bizarre price action in the front-month futures contract pretty well. Of course it ended the day slightly down, but that should come as little surprise.
Unfortunately, though, the stock did break below uptrend support (blue line) last week. Although it found its footing just above $30 and the 20-day moving average, it’s now having trouble reclaiming this prior trend line.
From here, we are getting a semi-clear roadmap on how to navigate the XLE ETF. If it can reclaim $34, it puts $36 resistance in play, as well as the declining 50-day moving average. Above that and a rally over $40 is certainly possible.
A move below $30 and the 20-day moving average would be a bearish development. That would put the $26 to $27.50 area in play on the downside, and potentially lower if oil prices continue to drag down the sector.
Top Stock Trades for Tomorrow No. 2: Exxon Mobil (XOM)
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Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) account for more than 46% of the XLE ETF, so it’s important that we look at these stocks, as well.
For Exxon, shares continue to find the $45 to $47.50 area as resistance. It’s holding the $38 area and the 20-day moving average as support for now, but like the XLE ETF, it has been unable to reclaim former uptrend support.
On a move higher, bulls need to see how XOM stock handles the $45 to $47.50 resistance zone and see if it can reclaim the 50-day moving average like it did with the 20-day moving average.
Below, however, $38 puts $35 on the table — with a move below that putting the lows near $30 on the table.
Top Stock Trades for Tomorrow No. 3: Chevron (CVX)
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Chevron broke below its rising wedge formation. A rising wedge can be bullish if shares break out to the upside. However, a break down from the wedge is a negative development and puts a bearish development in play.
The stock met resistance at $90, the February low, as well as at the 50-day moving average. That moving average is again rejecting CVX on Monday, as bulls struggle to maintain momentum.
A move over the 50-day puts $90 back in play, while a move over the latter puts $98 back on the table, which is the March high. Below $80, though, and a fall into the mid- to upper-$60s could develop.
Top Stock Trades for Tomorrow No. 4: Halliburton (HAL)
Halliburton (NYSE:HAL) isn’t aimlessly trading in the footsteps of its larger peers. Instead, investors are reacting to the company’s earnings report on Monday before the open.
The stock initially opened lower before turning positive on the day and rallying past $8 at one point. It’s one positive note to take away from the energy sector today.
If it can continue higher, see if HAL can close above $9, something it hasn’t been able to do in six weeks. Above that puts the declining 50-day moving average in play. If shares lose momentum or run into resistance, see how they trade on a pullback.
Below the 20-day moving average, and $6 is on the table. Below that, and shares could break below $5 and retest the recent lows.
Top Stock Trades for Tomorrow No. 5: Occidental Petroleum (OXY)
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Occidental Petroleum (NYSE:OXY) is similar to Halliburton. Shares are range-bound between $10 and $18, as the stock works on putting in a higher low after a multi-week test of $10.
Shares are struggling to hold the 20-day moving average, but it is still above uptrend support (blue line). A close below this mark and $12 could send shares back to $10, where the March lows are technically in play.
A move above $14 opens the door to $15.75 and above that, $18 is possible. A close above $18 technically puts a gap-fill up toward $26 on the table, provided OXY can reclaim its 50-day moving average.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.
