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On November 9, 2020, I posted Energy Stocks Are Making A Longer-Term Low. This is a follow up and a guide for stock selection. The original projection was made largely based upon two factors. First was the seasonality that has been favorable since autumn. Second was the dynamic monthly cycle which has been rising. See the graphs below. The power of this cycle combination has lifted the Energy Select Sector SPDR Fund (XLE) XLE by about 40%.

Monthly Histogram of XLE Index

Blue: Average Percentage Change

Red: Probability of a rise on that day

Green: Expected Return (Product of the first 2)

Monthly XLE Cycle Projection


The chart below lists the strongest stocks on a relative basis. The XLE index is used as a benchmark. This unique measure of relative strength utilizes several different optimized time periods rather than one.

Below are the monthly graphs of three of the strongest stocks. All three show higher lows in momentum running back about ten years. Relative strength versus the XLE turned up in the autumn. Technically and cyclically, these stocks are poised to make further gains.

Callon Petroleum Monthly Chart

Nabors Industries Monthly Chart

SM Energy Company Monthly Chart

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