Subscribers at Natural Selection Self-Directed Investing are aware that we added several energy stocks to our quick trade watch-list this week. Investors may be wondering whether the North American energy sector as a whole has finally bottomed. We can see in the chart below that the sector ETF is currently trading above its 50 day moving average (DMA) for the first time since April.
Although this is positive development, it is still too soon to confirm a bottom for the energy sector because the 50 DMA is still negatively sloping and a trend change can only be confirmed by the moving average eventually transitioning to positive. That being said, there are several individual companies that have much more promising charts.
As of this morning, Seven Generations Energy (VII) has broken out to a new high and has all the characteristics of an emerging trend as outlined in our trend trading methodology (long base and price above a positively sloped 50 DMA).
Crescent Point Energy (CPG) looks even stronger, having exploded across its 50 DMA and is now trading a full 45% above its August low.
In my opinion, these charts are a strong indication that we have a tradable bottom developing for the energy sector as a whole. If things continue this way, there will be many charts like these offering very profitable set-ups for Natural Selection quick traders. We will continue to monitor this In the coming days and will add to our watch-list as opportunities develop. If you are interested in becoming a self-directed investor, please check out our services here.