Oil & Gas - Energy - Commodities - Resources (OILBRENT)

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Is It Time to Buy the Dip in Oil, Energy Sectors?
By: ETFTrends | December 27, 2019

• While most sectors are cheering the latest record run-ups in the major indexes, the energy sector has had little to celebrate this year as it’s languished for the majority of 2019 with single-digit gains. With a recent uptick in oil prices thanks to bullish data from the Energy Information Administration, is this a sign that it’s time to buy the dip in energy?

“S&P 500 energy stocks, tracked in part by the?Energy Select Sector SPDR Fund?(XLE A), have charged 3% higher in the last week, a somewhat encouraging sign of life for a group that’s up just 6% for the year, well off the?S&P’s?nearly 27.5% gain,” a CNBC report noted.

“The energy sector is really one of the few places that we can find persistent long-term downtrends, both in absolute and relative terms, within the broader market,” said Katie Stockton, founder and managing partner at Fairlead Strategies a CNBC?“Trading Nation"episode. “That is obviously a check against it,” she said, even as investors “can argue for a loss of long-term downside momentum. That is definitely evident.”

Nonetheless, this could be a sign for investors to start adding exposure to energy if they haven’t already—or is it?

“We have seen some stabilization, in relative terms, for certain [energy]stocks or segments, but I think it’s a little bit too early to suggest that we’re seeing a meaningful long-term turnaround,” she said. “We’re not really getting a lot of breakouts on this move, but what I think we can attribute it to, in part, is the fact that?crude oil, or WTI, climbed above very key resistance around $60 per barrel.”

Whether long or short, traders can reap the benefits on both sides. Funds to consider are the?Direxion Daily Energy Bull 3X Shares (ERX C+)? for bullish plays and the?Direxion Daily Energy Bear 3X Shares (ERY B)?for bearish opportunities should they arise.

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