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Tuesday, July 29, 2025

Diving into Vitality Investments: Uncover Hidden Gems At the moment! | A View From the Flooring


KEY

TAKEAWAYS

  • The Vitality Choose Sector ETF (XLE) is exhibiting bullish momentum.
  • Occidental Petroleum could also be poised for a comeback with a 15% to 30% upside potential.
  • Baker Hughes might get away of a bullish formation, which might result in a 15-20% rally.

With oil costs surging and geopolitical unrest stirring within the Center East, it is no shock that vitality shares are drawing renewed consideration. And, fairly frankly, this week did not have many market-moving earnings. So this week, we skate to the place the puck is, or, on this case, the place merchants’ eyes might be centered—the Vitality sector.

Prior to now, we have now witnessed this sector spike as a result of conflicts, and adjustments can come shortly. The next setups seem to favor continued and fast momentum to the upside.

Vitality: A Sector on the Transfer

Let’s start with the large image: the Vitality Choose Sector SPDR ETF (XLE). This ETF affords a broad view of the vitality panorama. Sure, 40% of this ETF consists of simply two shares — Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX). So these two will drive the bus in terms of worth motion. Nonetheless, when trying on the total sector, we see some good threat/reward setups price monitoring.

From early 2024, XLE has been buying and selling in a moderately large impartial vary. In April, although, the ETF broke down and fell out of that vary. That was due partly to cheaper oil costs and a response to Liberation Day tariffs. This ended up being a traditional bear lure, as worth held its 200-week transferring common (pink circle above) and moved again into its vary.

The adage, “from false strikes come quick strikes in the wrong way,” is nicely in play right here, and given the basic backdrop of oil spiking as a result of battle, the push greater ought to proceed.

From a threat/reward set-up, the ETF might climb in the direction of the highest finish of its vary and certain get away greater. The chance is on the backside of the impartial vary — assist at $82.50 with a primary cease upside goal of $95. Given Friday’s shut, it isn’t an excessive amount of of a threat/reward distinction, however momentum indicators recommend the upside is achievable, probably shortly.

The weekly Transferring Common Convergence/Divergence (MACD) is flashing a robust purchase sign, whereas the Relative Power Index (RSI) is breaking a downtrend going again to its August 2024 peak. It has all of the makings of a run to resistance and potential breakout, with conservative upside targets of $108 given the vary from which the ETF is breaking out.

Occidental Petroleum (OXY): A Buffett Favourite Reawakens

If you happen to’ve adopted Warren Buffett’s investments, you will acknowledge Occidental Petroleum (OXY). The inventory has been overwhelmed down for fairly a while, however, final week, it awoke from its slumber.

OXY shares spiked on Friday, which places it at a key inflection level. This worth motion caught our eye, since we’re specializing in some good setups from a threat/reward perspective. There could possibly be extra room for the inventory to run.

OXY enters the week at its weekly downtrend, going again to its 2024 peak at $69.56. Technically, there’s main resistance forward, nevertheless it appears poised to assault these ranges and has rather a lot to reverse, which may give traders a pleasant share acquire within the meantime.

If shares can eclipse this current downtrend, then count on a fast run to its 200-week transferring common on the $52/$53 degree. This degree acted as a serious consolidation level for years; the as soon as mighty assist space might act as resistance and have to be watched carefully. Nonetheless, a date with this degree seems fairly promising and represents a 15% acquire from Friday’s shut.

If momentum continues and OXY breaks by means of that degree, it is clean crusing for one more 15+% upside towards the $60 space. OXY might proceed to its 2022–2023 consolidation space and accomplish that shortly.

Baker Hughes (BKR): Is It Able to Wake Up?

Lastly, we flip to Baker Hughes (BKR), an oilfield companies and know-how firm that has been a serious laggard since its February peak of $48.85. Technically, it enters the week at a serious inflection level.

BKR has shaped an ascending triangle, which is nearing its breaking level. That time occurs to be at its longer-term downtrend and its 200-day transferring common, which makes for an fascinating setup.

Draw back threat might see shares fall again to their 50-day transferring common and the rising short-term common that is inside this tradable formation. If BKR breaks beneath that degree, all bets for this near-term rally are off. 

The upside threat favors the bulls. If BKR have been to interrupt out, this is able to verify a brand new uptrend, with upside targets 15–20% greater than Friday’s shut.

Ultimate Ideas

The setups we’re seeing within the Vitality sector supply a good steadiness between threat and reward. Be aware of the draw back dangers and place your stops within the occasion the place goes in opposition to you. Keep in mind, vitality markets can shift shortly, particularly when geopolitical tensions are concerned.


Jay Woods

Concerning the creator:
is the Chief World Strategist for Freedom Capital Markets. Previous to becoming a member of Freedom, he was the Chief Market Strategist at DriveWealth Institutional. He additionally served as an Govt Flooring Governor on the NYSE, the very best elected place on the Trade held by solely six NYSE members. Jay spent over 25 years as a Designated Market Maker on the NYSE ground.
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