Got energy stocks?

Many traders avoid energy stocks. 

They dislike them because they can be quite news driven, moving violently up and down based on a headline or even a tweet from the president. 

But occasionally, the opportunity in energy stocks is too good to pass up. Today might be one of those times.

The stars are starting to align for the group. 

For starters, oil is on the move. It’s rallied more than 12% over the past week. 

Of course, oil has been volatile lately. It’s been jumping up and down based on the news coming out of the Middle East and the White House. 

But energy stocks are confirming the strength we’re seeing in oil. 

Take a look at this chart. It shows the recent performance of the State Street Energy Select Sector SPDR Fund (XLE). 

Yesterday, XLE broke a downtrend that’s been in place since late March. 

The State Street SPDR Oil & Gas Exploration & Production ETF (XOP) looks even better. It’s leading XLE.

That’s a bullish sign for energy stocks in general. Exploration and production energy companies are further out on the risk curve than your typical energy stocks. 

One of the nice things about energy stocks is that they can zig when the market zags. 

The VanEck Oil Services ETF (OIH) is also getting back on track in a big way. Yesterday, OIH ripped 6% higher and reclaimed its 50-day moving average for the first time in a month. 

 The across-the-broad strength in energy stocks tells me that this move should have legs. 

So, consider picking up some energy exposure if you haven’t yet. You can easily get exposure to this theme by owning any of the three energy ETFs I mentioned above. We just picked up XOP in my Express Trader advisory (upgrade here).

Another reason I like energy stocks here is that they can move independently of other parts of the market, making them a nice source of diversification.