The coming week is options expiration week (OPEX). These weeks have a bullish bias but this can vary greatly by month. The February OPEX week is not one of the stronger ones, and the following week is decidedly bearish. The S&P scale is tipped to the downside into the end of the month. However, the energy sector has risen by over 20% since the beginning of the year. The strong 2022 lift off in the energy sector is likely the beginning of a bull market in this sector. The fundamental conditions tend to rule the longer-term investment picture. The current opposition to fossil fuels will limit the supply and likely lift energy prices over the longer-term. The coming period is likely to be much like the 1970s. Most stocks declined while energy and inflation hedges rose. Energy was the place to be, as it is now.
Oil, the commodity, seasonally rallies into its two strongest months, March and April. The stocks show the same pattern. Instead of selecting stocks for this coming volatile two-week period, we will look out into the spring. The energy sector stocks are screened to detect the best performers.
Here is a screen of stocks that have performed best in the coming period. To select some shares for short-term trades, the following strategy is employed. The best-performers in the chosen time period with at least 20 years of price data are calculated and are presented below. The issues are ranked by the percentage of time periods in which the stock rose.
Energy Stocks Performance from February 13th to March 1st
From this list, the stocks are screened for relative strength and by dynamic cycles. The latter term refers to the most active cycles that are generating profits now.
Precision Drilling is number three on the screen. The stock has risen almost 65% of the time in the coming weeks over the last 25 years. The expected return has been 1.1%. Technically, relative strength has been strong. February has been one of the strongest months of the year, price rising more than 65% of the time. Shares could rise closer to $60.
Chevron Texaco is ranked fourth. It has risen almost 64% of the time in the second half of February over 41 years. The stock is also very strong longer term. Below we see the monthly graph. Note that the stock has broken out to a new all-time high. Typically, price rises by an amount equal to the height of the formation from which it emerges. This projects a share price of $175 over the longer term. This has left the stock very overbought, but this is acceptable in light of the longer-term upturn in relative strength. The relative upturn ends a nine-year relative downtrend. Application of technical lore projects about 5 years of relative outperformance. Over the next two weeks, the share price is likely to move closer to $145-$150.