The Energy sector continues to be our top ranked sector currently and Energy SPDR (XLE) broke out to a new 7-year high today. The sector continues to be positioned well both from a technical standpoint, with XLE trading in an uptrend above 4 rising moving averages, but also from a fundamental standpoint. XLE trades at 12.1 x forward earnings, well below the S&P 500 and yields 3.31%, well above the S&P 500.
While crude oil can be a volatile market and there could be some risk premium priced in currently, due to geopolitical tensions, the chart has been trending higher over the last year. Three of our favorite stocks in the sector include Chevron (CVX), which yields 4%. Devon Energy (DVN) broke out to new highs today, in a longer-term uptrend as well and in oilfield services, Halliburton (HAL) is trending higher, near breakout levels. We view this sector overall as attractive here and on any potential pullbacks.
Disclosure: I am currently long Chevron (CVX) and Devon (DVN).