In recent days, the market performance, which has undoubtedly shown a great increase so far this year, has stalled. There are plenty of technical explanations, for example the S&P 500 is also struggling with the massive resistance of 4,200 points. At the same time, it is more likely that the negotiations on the debt ceiling are not really progressing in the background, so the risk of non-payment may become more and more threatening in the coming days. So the market is nervous.
All sectors are affected by this phenomenon, but perhaps the energy sector is less dependent on these processes in terms of exchange rates. The reasons could be listed or dissected at length, but the most spectacular thing is that in the last month and a half, investors have fallen out of love with this sector. So it is not so surprising that some kind of rotation has started amid the change in market sentiment. While tech papers and the Nasdaq have dominated in recent weeks, oil papers may be worth watching in the event of a possible short-term turnaround.
This can also be supported by oil prices, WTI was able to turn for the second time around 67-68 dollars at the beginning of May, thus trying to establish a better technical picture. It can be seen that WTI is already struggling with the 50-day moving average, so oil can return to the previous range of 70-80 dollars. This performance is especially good considering the fact that the dollar strengthened in the meantime, so oil was able to improve relatively much compared to other currencies, the strengthening in HUF was already more than 10 percent.
In this environment, the technical picture of either Exxon or Chevron has improved a lot, and a more stable oil price would obviously be favorable to the fundamentals as well. Like at the end of March, after a few days of movement, Exxon finally got back above its two-hundred-day moving average, and with this, it can open up the space to the upside. Of course, there is room to bounce back after major setbacks, but technically, for example, ConocoPhillips is already above the moving averages, which means there are several interesting stocks in the sector.
It is therefore not worth burying the market in the shadow of risks either, because it is possible to find interesting sectors or sub-sectors that could be winners of a possible rotation in the changing mood. If the negotiations on the debt ceiling were to go really badly, it could affect all stocks very negatively, so it is not easy to filter out this risk in the market right now.
