‘No real hope’: Energy stocks aren’t worth holding as they sink deeper into the red, two traders say
The energy sector’s problems will probably get worse before they get better, two traders say.
With the Energy Select Sector SPDR Fund (XLE) falling 5.5% last week during the market’s worst one-week sell-off since March and oil prices at five-month lows, the group’s issues only seem to be compounding with Tuesday’s pivotal presidential election looming, said Craig Johnson, Piper Sandler senior technical research analyst.
“There’s no clear indication of a trend change anywhere close to happening with this particular index,” Johnson told CNBC’s “Trading Nation” on Friday, citing a chart of XLE.
Moreover, the ETF’s three biggest holdings — Chevron at nearly 24%, Exxon Mobil at more than 23% and Kinder Morgan at almost 5% — don’t seem to be reversing their trends, either, Johnson said.
Exxon Mobil and Chevron last week reported 30% drops in revenue for their third quarters as coronavirus-related restrictions slam the oil and gas business.
“As we sit here and correct back toward the March lows with some of these names, again, there’s no real hope,” Johnson said, adding that Exxon’s stock could be in particularly risky territory.
“We’re very close to breaking below those March lows,” he said, adding that any break below those levels would likely lead to another leg lower for the stock.
With the XLE down over 52% this year, “we have no sign at this point of it starting to go higher,” Shay warned.
Reference: CNBC
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