S&P 500   4,071.70
DOW   34,429.88
QQQ   292.55
Get Rid of Your Siri Remote Once and for All This Year
The 3-Stock Retirement Blueprint (Ad)
Russia rejects $60-a-barrel cap on its oil, warns of cutoffs
Moldova signs new energy deal that could ease blackout risk
Why Your IRA Could Crash on January 16th? (Ad)
No OPEC+ oil shakeup as Russian price cap stirs uncertainty
OPEC+ oil producers face uncertainty over Russian sanctions
Why Your IRA Could Crash on January 16th? (Ad)
OPEC keeps oil targets amid uncertainty on Russian sanctions
FDA change ushers in cheaper, easier-to-get hearing aids
S&P 500   4,071.70
DOW   34,429.88
QQQ   292.55
Get Rid of Your Siri Remote Once and for All This Year
The 3-Stock Retirement Blueprint (Ad)
Russia rejects $60-a-barrel cap on its oil, warns of cutoffs
Moldova signs new energy deal that could ease blackout risk
Why Your IRA Could Crash on January 16th? (Ad)
No OPEC+ oil shakeup as Russian price cap stirs uncertainty
OPEC+ oil producers face uncertainty over Russian sanctions
Why Your IRA Could Crash on January 16th? (Ad)
OPEC keeps oil targets amid uncertainty on Russian sanctions
FDA change ushers in cheaper, easier-to-get hearing aids
S&P 500   4,071.70
DOW   34,429.88
QQQ   292.55
Get Rid of Your Siri Remote Once and for All This Year
The 3-Stock Retirement Blueprint (Ad)
Russia rejects $60-a-barrel cap on its oil, warns of cutoffs
Moldova signs new energy deal that could ease blackout risk
Why Your IRA Could Crash on January 16th? (Ad)
No OPEC+ oil shakeup as Russian price cap stirs uncertainty
OPEC+ oil producers face uncertainty over Russian sanctions
Why Your IRA Could Crash on January 16th? (Ad)
OPEC keeps oil targets amid uncertainty on Russian sanctions
FDA change ushers in cheaper, easier-to-get hearing aids
S&P 500   4,071.70
DOW   34,429.88
QQQ   292.55
Get Rid of Your Siri Remote Once and for All This Year
The 3-Stock Retirement Blueprint (Ad)
Russia rejects $60-a-barrel cap on its oil, warns of cutoffs
Moldova signs new energy deal that could ease blackout risk
Why Your IRA Could Crash on January 16th? (Ad)
No OPEC+ oil shakeup as Russian price cap stirs uncertainty
OPEC+ oil producers face uncertainty over Russian sanctions
Why Your IRA Could Crash on January 16th? (Ad)
OPEC keeps oil targets amid uncertainty on Russian sanctions
FDA change ushers in cheaper, easier-to-get hearing aids

3 Energy Stocks Nearing Breakouts From Cup-Shaped Patterns

3 Energy Stocks Nearing Breakouts From Cup-Shaped PatternsS&P 500 component Devon Energy (NYSE: DVN) is among the market’s best performers, outrunning its index by a wide margin. 

Energy continues to be a sector that’s home to stocks living up to the name, while others continue to languish. 

Year-to-date, Devon has advanced 64.20%, boosted more recently by a small uptrend in August, just as the broader market was declining. The stock is up 18.67% in the past month. Shares closed at $71.20 Monday, up $2.69 or 3.93%.

Meanwhile, the S&P 500 is down 14.79% year-to-date, although it rallied 3.66% the week ended September 8, and gapped 1.07% higher Monday. 

Devon announced on August 9 that it entered into a definitive purchase agreement to acquire Validus Energy, which operated in the Eagle Ford Shale in Texas, in a cash transaction valued at $1.8 billion. It’s expected to close at the end of the third quarter.

Since Devon reported earnings on July 29, four analysts boosted their price targets on the stock, according to MarketBeat analyst ratings. Wall Street’s consensus rating on the stock is a “moderate buy” with a price target of $75.53, an upside of 6.08%. 

The company has been on a tear, growing both sales and earnings at double- and triple-digit rates in each of the past four quarters. It has a stellar return on equity, at 39%. 

Devon’s chart is revealing a classic cup-with-handle pattern, with a buy point above $75.27. It’s a toss-up whether those patterns actually work at any given time. However, it makes intuitive sense that institutional investors would snap up shares after a short selloff, giving them an opportunity to add to a position at a lower valuation. 
3 Energy Stocks Nearing Breakouts From Cup-Shaped Patterns

Energy Sector Still Powering Up

The energy sector remains the big winner of 2022. The Energy Select Sector SPDR ETF (NYSEARCA:XLE) has returned 48.12% this year. The only other sector with a 2022 gain is utilities, which is up 8.10%. 


The best performer within the large-cap energy sector is Occidental Petroleum (NYSE: OXY), which checks in with a gain of 126.32% this year. Like Devon, large-cap Occidental has been notching a string of solid earnings and revenue increases in recent quarters. 

Smaller energy companies have also been participating in this year’s rally. For example, an ETF I often use as a proxy for the small-cap energy sector is the Invesco S&P Small Cap Energy ETF (NYSEARCA: PSCE). This ETF, which is based on the S&P SmallCap 600 Capped Energy Index, is up 44.17% this year. 

Because the index tracks smaller companies, risks are higher but so is the potential reward. It’s been outperforming the broader market (by a long shot), which is exactly the ETF’s premise, during periods when energy prices are rising. 

Watch The Chart Patterns

The largest component in the small-cap energy index, by weighting, is SM Energy (NYSE: SM), a Denver-based natural gas explorer and producer with a market cap of $5.669 billion. Although a small cap is traditionally a company with a market capitalization below $2 billion, it’s too hard for indexes to reconstitute when a company grows to the level where it’s technically a mid-cap, as SM is. 

SM has returned 57.84% year-to-date. In Monday’s session, the stock cleared a cup-with-handle pattern, although it retreated to finish below the breakout price, but still with a gain on the session. 

Interestingly, the broader large-cap S&P is following a trajectory similar to the numerous cup-and-handle patterns we’re seeing in energy stocks, but with less upside momentum in recent weeks. A weekly chart for the S&P 500 indicates that a handle could possibly form soon, if we see a downturn of five days or more. 

Denbury (NYSE: DEN) is forming a cup-shaped pattern below its August 23 high of $93.95. The stock corrected after rallying on rumors of a sale, but there’s been no news on that front in recent weeks. Even without being an acquisition target, the Plano, Texas-based explorer and developer is showing strength relative to the broader market, and analysts expect strong earnings in the next two years. 

It’s always a good idea to focus on stocks outperforming the broader market, but use caution: Don’t chase stocks well beyond their breakouts, but use MarketBeat data tools to find fundamentally strong stocks that are in the early stages of price upticks.

Should you invest $1,000 in Invesco S&P SmallCap Energy ETF right now?

Before you consider Invesco S&P SmallCap Energy ETF, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Invesco S&P SmallCap Energy ETF wasn't on the list.

While Invesco S&P SmallCap Energy ETF currently has a "N/A" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Devon Energy (DVN)
3.1016 of 5 stars
$68.46+0.3%9.06%7.19Moderate Buy$81.28
Denbury Resources (DNR)
0 of 5 stars
$0.24flat103.73%0.37N/AN/A
Occidental Petroleum (OXY)
2.2857 of 5 stars
$68.21-0.9%0.76%5.68Hold$76.11
SM Energy (SM)
2.7843 of 5 stars
$41.11-1.2%1.46%4.00Moderate Buy$52.44
Energy Select Sector SPDR Fund (XLE)N/A$90.31-0.6%3.39%N/AHoldN/A
Invesco S&P SmallCap Energy ETF (PSCE)N/A$10.82+1.3%1.11%N/AN/AN/A
Compare These Stocks  Add These Stocks to My Watchlist 

Kate Stalter

About Kate Stalter

Contributing Author: Retirement, Asset Allocation, and Tax Strategies

Kate Stalter is a Series 65-licensed asset manager, with more than two decades of experience in various areas of financial services. As an investment advisor and financial planner, Kate personally manages client portfolios, with a focus on successful retirement, including asset allocation, income generation and tax strategies. Kate also serves as a capital-markets contributor at Forbes.com, and is an expert columnist for the investment advisory channel at U.S. News & World Report.
Contact Kate Stalter via email at stalterkate@gmail.com.