Some reasons why we like the energy sector right now..
• Oil just broke above a key technical level at $83, leaving $95 as the next potential technical target. The sector looks good technically as well, as illustrated below.
• April is the best seasonal month for the energy sector going back 40 years (source: Ned Davis Research).
• This market looks like it wants to rotate away from the big technology winners. Cyclical value is a logical place to go, including energy (potential industrials as well which have started to look more interesting).
• Valuations are attractive. Producers’ increased focus on cash flows provides valuation support.
• Earnings revisions are best among all S&P sectors over the past month. Earnings season is right around the corner, and the sector looks poised for solid upside.
• The sector can offer some protection against rising rates and sticky inflation.
• A treacherous geopolitical environment offers potential upside to oil prices (unfortunately).
#energy #oil #stocks #risingrates #inflation