Are Energy Stocks A Buy In April 2017?

Crude oil had a good week going sharply higher from $47.10 to $50.85. Is April 2017 shaping up to be bullish? Is is time to buy energy stocks for the short and/or long term?

As always, investors become bullish once they start reading positive articles in financial media. It goes without saying that media was bullish this week.

Bloomberg did not say it in exactly the same way, but the energy market and, hence, energy stocks are a screaming buy according to this analyst. Also, in another article, Bloomberg looked at crude oil inventory in order to conclude the energy market is bullish.

DailyFX was positive on crude oil and energy stocks, hence a buy.

From InvestingHaven’s perspective, there is not sufficient proof to conclude that investors should buy energy stocks or the energy market. Short term trading positions could be justified though. How to come to such a conclusion? We look at the longer term crude oil chart, long term energy stocks and the relative strength of energy stocks to the broad stock market. That is the way to avoid a common pitfall, which is to get too excited after one bullish week.

Before looking at the three charts, we would like to note that this post is a followup on what we wrote last month in Energy Stocks Could Collapse If This Happens. Similar charts were used last year when we explained if investors should buy energy stocks.

Are energy stocks a buy in the short term?

First, crude oil is in a neutral zone. The chart suggests that the $46 to $52 area is an in-between area. Below $46 crude looks ultra-bearish, below $60 it is ultra-bullish. The $52 to $60 area acts as very strong resistance.

Right now, crude oil is not bullish nor bearish. Short term, crude is likely to rally a bit.