On the above Relative Rotation Graph, the Energy sector (XLE) hooked back towards a positive RRG-Heading while inside the improving quadrant. In terms of the JdK RS-Ratio, it is still the weakest sector, but things seem to be starting to improve.
Although the sector as a whole may not be ready for you to fully invest in, there are definitely a few stocks inside the sector that are worth an extra look. One of these names is NOV, National Oilwell Varco.
The chart above shows how NOV dropped from $48 to $18 within a year, from August 2018 to August 2019. After the stock found support in the area around $18, a consolidation process started that lasted a few months and currently seems to be on the verge of being broken upwardly.
On the weekly bar chart, price is peeking above the horizontal barrier at $24.75. If we are able to hold above this level at this Friday's close, the road is free for a rally towards $30, where the next overhead resistance level is found.
From a relative perspective, the RS-Line is completing a rounding bottom and has just started a series of higher highs and higher lows. The RRG-Lines are now both comfortably above 100, positioning NOV well inside the leading quadrant and at a positive RRG-Heading.
When the improvement in the Energy sector manages to continue, NOV could be one of the stocks leading the charge.
Julius de Kempenaer
Senior Technical Analyst, StockCharts.com
Creator, Relative Rotation Graphs
Founder, RRG Research
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