Devon Energy is one of the many oil stocks moving today. Weekly chart shows volume drying up during base and ramping up on the right side.
[MUSIC PLAYING]
- And you mentioned oil and gas also being an area of strength. So here is Devon Energy, ticker DVN. It's had a nice streak of weekly gains, as it recently broke out of a cut base of its own. And what do you think about Devon? Kind of a similar chart, actually.
- It is, actually. That was one of the things-- you took the words right out of my mouth. That was something that-- I actually mistakenly thought that I had moved on to a different one when I was going through the list today. And I hadn't. It looked very similar.
So again, just looking at my screens today, oil and gas was one of those areas of strength. So whether or not you were looking at the broader energy SPDR sector fund, which is XLE, I believe that was up 2.2% today. So that was top in terms of those select SPDR funds.
But a lot of times, I've been looking at, more specifically, the oil and gas explorers. That's with XOP that you could be looking at. You could be looking at the servicers that's OIH. And a lot of these look very similar, right? It's formed this kind of cop with handle. And now it looks like these are poised to break out.
So you've got a lot of these stocks that look the same. And Devon Energy, getting back to that one, that one has that same look, has a lot of strengths. And if we can go back to the weekly, when you get there, one of the things that I liked about--
We were actually discussing this. We put it on the leaderboard. And one of the things I liked about this base pattern was that on the weekly chart, you can see that there was a dry up in the volume on its way down. And then some of that volume started picking up on the way up.
And, yeah, sure, you could say, well, it's still below average. But look at the comparison of what it did on the way down to the comparison of what it did on the way up.
Now, the start of that base did start out with some pretty heavy volume on the downside. But again, when you compare it to the positive volume just a couple of weeks before, you're seeing a lot more blue on that bottom than you are in the red. And so I think that speaks well for this one.
Again, the relative strength line is looking very strong. It's in the right area. And for as much as we might be talking about reducing the carbon footprint, going nuclear, look, fossil fuels, they're not going anywhere anytime soon. A lot of this stuff in terms of clean energy is going to take a while. And so fossil fuels are still going to be around for a while.
- Mm-hmm. And so with a stock like this and, really, this whole group that has seen such a notable move since last November, this is the first full-fledged base that a lot of them have been forming. And we're now seeing breakouts. Can you talk about the significance of that?
- Well-- and strangely enough, this is one of the things you actually want in a lot of your stocks. You want them to be hard to get into. The ones that play hard to get are usually the ones that are worth having the most. And so the fact that it didn't base, that it was so strong that it just didn't want to take the time to base, as much as we love bases because that gives us the opportunity, some of your strongest stocks won't give you that many opportunities to get into them.
So Devon Energy and a lot of these oil stocks have now put and a base. The strength is coming back in. Their pause was really temporary. And so I think this is one of those opportunities. You could be looking at getting into some of these plays, whether it's through the ETFs or through some of these individual stocks.
But you do have to be careful because, as we were talking about on "IBD Live" today, commodity plays are tougher. You've got a company that's levered to a commodity. That commodity is prone to-- I mean, with oil stocks, I mean, you've got inventory amounts, rig counts, all of these things that almost act like earnings announcements all the time, multiple times during the week. So that can always shift things. And so you just have to be aware of that. They can be a little bit more volatile and a little bit harder to play.
