By Doug Busch
Energy has been far and away the market's standout performer lately, showing persistent strength even as broader economic conditions have turned more uneven.
Supported by firm commodity prices, the sector has continued to climb while other areas have struggled to maintain momentum. Any pullbacks in energy stocks have been shallow and short-lived, technical analysis shows, reinforcing the underlying demand and keeping the sector as a clear market leader. That means investors should keep an eye out for dips that offer a chance to snap up these shares.
That strength, however, might have temporarily ended with this week's bearish dark cloud cover candle, which stopped a 14-week winning streak. The State Street Energy Select Sector SPDR exchange-traded fund fell 5.3% in the holiday-shortened week, its worst weekly loss in exactly one year. But this drop could simply be the sector taking a breather after its extended run upward.
This week's loss is a bit of an echo of the 15% drop the fund experienced last year in the first week of April. Notice the surge in volume the very next week in April 2025, which recorded a bullish counterattack candle and marked the depth of the long cup base.
That particular pattern for the energy ETF actually began with a bearish dark cloud cover the week ending April 12, 2024, so its breakout this past January was more significant because it was longer term, which tends to have a higher chance of success. Last month, the ETF's weekly relative strength index, or RSI (a gauge of how overbought or oversold a security is), hit a high of 86, which translates to very overbought. It has worked off some excess there, but still trades at 71.
However, the fund's long-term trend remains healthy, with the 50-week simple moving average sloping higher. A prudent pullback toward the low-to- mid $50s makes sense in the near term. That would give the ETF price a chance to catch up to the 50-week simple moving average and retest the 21-month cup base breakout.
The State Street Energy Select Sector SPDR ETF closed Thursday at $59.25.
Investors should watch a couple of names for opportunistic entries as the energy group pulls back.
APA, a leading exploration and production player formerly known as Apache, has achieved a solid one-year return of 137% and pays a dividend yield of 2.4%. The stock is 8% off its most recent 52-week high and has been a very consistent performer -- it recorded zero three-week losing streaks in the last year and fell in consecutive weeks just three times over the same period.
The weekly chart shows a possible double top at the $45 level, coinciding with the summer of 2024. Last week, APA registered a bearish dark cloud cover candle falling more than 5%, while the RSI remains a white-hot 76.
Like many names in the group, this name saw massive volume one year ago. The weeks ending February 28 and April 4, 2025, saw active volume slump by 9% and 27%, respectively. A spinning top near $15 the week ending April 11, 2025, indicated that selling pressure was abating. Now, investors should consider an entry on a pullback toward the breakout above a double bottom pivot of $36.15 from the week ending March 20, 2026, so around $38. Look for a move toward $50 later in the second half an area touched in June and November 2022.
APA closed at $42.04 Monday.
Range Resources, another exploration and production player that focuses primarily on natural gas, has risen an impressive 23% year to date. This week, the stock slipped 9%, recording a bearish engulfing candle. That marks its largest decline since the first week of April last year, when it slumped 15%. It now trades at a level not seen since the summer of 2015.
The daily chart shows the stock falling every day last week with a bearish engulfing candle on March 30. The stock is on its first four-week losing streak since the start of December. The $40 level -- which acted as a significant roadblock since January 2024 with several rejections -- should now see that former resistance turn into support.
A double bottom breakout occurred above a $40.98 pivot from Feb. 27, 2026, which saw the stock jump 6% on firm volume. Notice the base started on June 23, 2025, with a bearish engulfing candle. Look for an entry at $41.50 and this could hit $60 by year-end, a 38% gain from current prices.
Range Resources closed at $43.45 Monday.
These setups suggest viewing weakness as a chance to add energy names, not exit.
Write to Doug Busch at douglas.busch@barrons.com
Doug Busch is the senior technical analyst at Barron's Investor Circle . His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 03, 2026 13:34 ET (17:34 GMT)
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