As US stocks bounced moderately on Wednesday, the bulk of the gains originated from the energy sector. The rise in the price of oil due to the situation in Syria finally caused a pop in energy-related stocks. The S&P 500 energy sector rallied roughly 1.80 percent on the day with the big gain very much aided by the strong moves in ExxonMobil Corp (XOM:xnys) and Chevron Corp (CVX:xnys). And for more context still, over on the Dow Jones Industrial Average, half of its gain on the day came from those very two stocks.
Oil itself on the day rallied too, as it continued its break out of a multi-week consolidation zone. Commodities on the broader scale, as indicated on the below chart of the Dow Jones UBS Commodity Index (DJP) on Monday broke past a nearly twelve month old down-trend, in a move that is intermediate-term bullish.
Exxon Mobil Corp (XOM) on Wednesday, as a result of its market leading one day rally broke out of a multi-day consolidation period in a move that looks to have more near-term upside to complete. The chart of Chevron Corp (CVX) looks almost identical, and given that Wednesday’s bounce is closelz linked to the situation in Syria, both stocks will likely move in good correlation in the near-term.
Oil and natural gas exploration company Concho Resources Inc (CXO) on Wednesday pushed up against a resistance line dating back to September 2012. The stock has been in a consolidation phase for much of August, and Wednesday’s push up now increases the odds of a push past resistance sooner rather than later.
Even stocks such as National Oilwell Varco Inc (NOV), a provider of services as well as equipment and components used in oil and gas drilling, on Wednesday marginally pushed above an eight month resistance area and continues to look promising for further increases.
All in all, many stocks related to the oil and gas business are looking promising for further increases in the near-term. Important to note however is that oil tends to at least temporarily drop once US military strikes begin. How the oil and gas stocks hold up on any potential pullback in oil after a US military strike begins will be the litmus test they need to pass for more investors to jump on this long-side trade.