By Doug Busch
Energy stocks are sliding today, but the pullback may be temporary. The recently-announced cease-fire in the Middle East has eased immediate geopolitical concerns, removing the primary driver of higher crude prices. Barring a collapse peace talks, the group's gains would likely come from the largest holdings in the top-heavy State Street Energy Select Sector SPDR ETF.
Chevron, the ETF's second-largest component at 17% of assets, looks attractive as it now trades 12% below its most recent 52-week high. Its daily chart shows a double bottom could be forming:
Note how Chevron is beginning to outshine the ETF's largest holding, Exxon Mobil, on the ratio chart, with a higher low printed in February and April. Other factors supporting Chevron include recent accumulation. Heavy volume accompanied the price surge that started in December, an indication of institutional buying. The stock broke above a double bottom pivot of $158.05 from Jan. 5, and from there built a bull flag that was taken out at the $185 level in early March. That should be a floor if tested and early on, the stock's 50-day simple moving average provided support.
One can enter here and add to above a potential double bottom pivot of $204.72. Notice the base began with a dubious evening star pattern completed on March 31. Remain bullish above $175. Chevron was trading around $190 Wednesday.
Looking at the monthly chart shows the overall picture remains clear. The digestion since 2022 was preceded by a firm uptrend dating to 2017, which bodes well:
Doji candles in January and May 2018 served as canaries in the coal mine, guiding investors to anticipate a large drawdown. I like to mention there is no reason to catch a falling knife until a catalyst presents itself. That came with a bullish piercing line in April 2020, followed by a morning star pattern completed that November. The current cup base breakout above a $189.87 trigger taken out in March, was started with doji candle in November 2022. It came close to retesting a double bottom breakout from January 2022, and the stock is now right at last month's cup base breakout.
Keep in mind the longer the breakout, the more success prone it tends to be. Bulls should therefore lean on today's pullback as an opportunity. Short-term volatility offers a doorway for confident investors.
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.
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(END) Dow Jones Newswires
April 08, 2026 11:17 ET (15:17 GMT)
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