Yesterday, I recommended SPDR Energy Select Sector ETF (NYSE Arca: XLE) shares as one of the "Best in Breed," a screaming buy according to my proprietary system.
My "black box" scans thousands of exchange-traded funds (ETFs) and all the activity and various technical indicators of each of the constituent companies within the fund. It would take a human thousands of hours to pore over all the data - if they didn't go crazy first. Fortunately, I love data, and my system does all the heavy lifting for me, anyway.
The bottom line is, my Best in Breed pick is set to deliver a 12% gain in short order, and the trade I set up on it should double your money in a month or so if you're playing along. (There's still plenty of time to get in on the action if you missed my alert yesterday, too.)
I love finding real outperformance, as you can see. And I've got another opportunity all lined up for us now.
Let's take a look...
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The Energy Sector Is Zooming Right Now, and This Is the Best Way to Tap into It
Among the 33 companies in the SPDR Energy Select Sector analyzed by my system, three stand out as current Best in Breed candidates ripe for a bullish, long position: Range Resources Corp. (NYSE: RRC), Helmerich & Payne Inc. (NYSE: HP) and Apache Corp. (NYSE: APA).
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These are all good buys, but Apache, specifically, is our target.
Despite a rough start to the year, Apache shares are now back in the green with a small return of 1% for 2018, but this is just the beginning.
The technical picture for the shares turned positive in early April, as my system picked up on a shift in the trends and put the stock on the intermediate-term bullish list.
From there, the break above $40 served as an indication that traders were now on the scent of the newly forged bullish trend.
Still, not everyone was bullish on this company - and that's key to our opportunity here.
A Spotlight Role in the Energy Sector
I've watched the bears add to their short positions to the point that short interest on Apache is near its two-year high. This, combined with the technical turnaround, suggests that a valuable short-covering rally is almost imminent.
Finally, the technical strength is likely to garner upgrades from the analyst community.
Currently, only 33% of the analysts covering the stock have it ranked a "buy," while the remaining 67% sit on the proverbial sidelines as this stock takes off from a long-term double-bottom at $40.
Upgrades will go a long way to helping the stock attract more buying volume over the next few months, wiping out the short-sellers and playing right into our hands.
My short-term price target: $48.
Buy-and-hold investors should be holding the stock with that target in mind, roughly 10% higher than today's trading price.
As always, I'm looking to leverage the move to my price target with the use of an option. That said, I've already issued a recommendation to my Seismic Profits Alert readers to bolster the potential returns from this Best in Breed energy stock.
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About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.