Buying Energy dip

2021年3月19日

Technical Analysis / Trade Setup
There could be a trade coming up next week in energy.
The 50sma has worked as support 2 consecutive times, and could potentially do it again.

This level is also coincidental with the 50% Fibonacci retracement level & 2020 highs; which suggests this support level has more strength.

Backtesting Data
There is a very interesting discrepancy between stocks within the energy sector going on; where most stocks are above the 200sma, byt below their 10sma. --> From 1979 until today, there has only been 12 times where this has happened...
What did it mean going forward?
Energy was up 70% of the time looking a year later, with an average of 27%.

Fundamental Analysis

Bull case for energy:

• Oil is priced above the level at which the average company can cover expenses;
  
• Supply has declined with lower production and OPEC compliance;
  
• Large diversified energy companies have strong balance sheets and access to capital;
  
• The ongoing recovery of the global economy bodes well for returning oil demand
  

Bear case for energy:

• Oil demand is still down significantly.
  
• Valuations are opaque.
  
• There is weak long-term stock price momentum.
  

~ For the full article on sector view, send a message and I will be happy to share the resources I have. ~