The underperforming energy sector has been recovering. The sector relative strength has risen from last place to number six. Since 2000, this level of improvement has led to higher prices over the next four weeks in seven of eight cases. The internal readings such as breadth are improving within the sector; the advance-decline has hit a new high. These positive developments are occurring in the bullish March-April time frame. April has brought higher prices in this sector about 65% of the time for an average gain of over 4%. From March 23rd through June 9th, price has risen 72% of the time over the last 25 years.
Technically, we see the picture of the XLE
XLE
Energy Sector ETF below. The weekly strip shows a consolidation that developed over the prior 18 months. A breakout would project a rally to 110, 20% over the last quote. The monthly graph shows that this resistance level runs back to 2014. There are series of higher weekly momentum lows, a bullish development. The only negative here is the falling relative strength.
XLE Daily, Weekly, Monthly
XLE Group Monthly Histogram
Red: Probability of higher price
Blue: Percentage Price Change
Green: Expected Return
In terms of stocks. Only about a third are outperforming. The best of the group in terms of seeking gains through this spring are:
SM-St. Mary
NGS-Natural Gas Service
MPC-Marathon.
These stocks show higher lows in momentum weekly and monthly. Weekly, St. Mary shows relative strength improvement. There are new relative weekly highs in this important measure with Natural Gas Service and Marathon. All three are likely to add to their price gains.
St. Mary-SM
Natural Gas Service-NGS
Marathon-MPC
