Stock Trends

Yes, we want to be buying energy stocks here

Good morning,

In this week’s Monday Morning Playbook, I highlighted a two-part process we’re looking for to buy equities broadly. My base case is that seasonality will continue to work and this right-on-time correction will be buyable for a year-end rally.

The main risk to that thesis is breadth. Ideally, you have strong long-term uptrends at the individual stock level and you get a short-term washout. But with more than half of stocks in the S&P 500 below their 200-day moving averages, it is hard to make the case that we’re in that environment.

But there is one sector where we do have that setup: Energy.

This week, we’ll look at leading energy stocks as well as:

• The S&P 500’s 5 best and 5 worst-performing stocks in September

• Recent breakouts that are holding

• A few stocks on the Blue Chip Hot List

• and noteworthy charts from the Dow Jones Industrial Average

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Leading energy stocks

That’s an all-time high for Exxon

Boom! Anyone think a breakout to all-time highs for the largest stock in the energy sector might be bullish? I do. The base measures to about $136, or 13% of upside from yesterday’s close.

Textbook retest for CNQ

I called out CNQ as an “energy stock to buy” one month ago and the stock has now posted a textbook retest of its breakout point. This week’s move has also pushed it to YTD highs vs. the S&P 500. Not too late to get involved.

Hess also bounces off support

HES was a leader even when energy was consolidating, but the stock is still working. It posted a +4% day on Wednesday, resoundingly bouncing off support at $149. That level would make an attractive tight stop.

Hot List holdings continue to pay