Energy Stocks - Is it Time to Feed the Ducks?

Crude oil WTI continues to relentlessly move higher on the back of tight supply and strong demand, and with China coming out of lockdowns and the summer driving season arriving soon, the situation remains bullish for oil and gas investors.

Back in January of this year, I wrote about energy stocks being the new momentum stocks and not only has this been a great trade it's also come true with Exxon Mobil Corp becoming the largest holding in MTUM (Momentum Factor ETF).

However, the energy trade is no longer a secret or at least it's no longer being ignored, and you can see this in the price action of the stocks as those late to the party are now chasing it higher. 

As you can see in the chart below of XLE (US Energy ETF) the slope of the trend is increasing as more buyers rush in pushing prices toward overhead resistance near the old highs from 2008 and 2014.

It's a similar situation in Canadian energy stocks XEG (CDN Energy ETF) as the slope of the rally continues to steepen which could produce unstable price action in the near term if buyers become exhausted.

If you have been long energy stocks it's probably a good time to consider taking some profits. This doesn't mean they can't move higher longer-term but in the near term, they could be getting ready to correct or at least take a breather.

As the old Wall Street saying goes, "when the ducks are quacking feed them."

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Nothing in this blog post should be considered investment advice and is provided for educational and entertainment purposes only. The commentary and information represent the opinion of the author and are not recommendations to buy or sell any security or investment product. The author may or may not hold positions in the securities and investments mentioned. Full disclaimer here.