The charts on this energy stock are pointing to a big move higher
The energy sector hasn’t stood out in 2025. It’s not the worst-performing S & P 500 sector, but a year-to-date advance of only ~6% is clearly trailing the leaders by a wide margin ( XLC +21%, XLK +20%, XLI +16%). That doesn’t mean we should ignore it. Beneath the surface, there are some constructive technical developments worth noting. If the recent energy comeback attempt is for real this time, several stocks could benefit—one of them is PSX . PSX has done a good job holding near its highs, especially compared to other energy names. Today, the stock is up, and on the daily chart it is attempting to break above its recent high of 135. That’s a critical level, as it marks the top of a clear bullish cup-and-handle formation that stretches back to early July. A breakout above this level would trigger an upside target, using the measured-move strategy, of approximately $150. Zooming out, PSX is also breaking above a much larger weekly bullish cup-and-handle formation. Given the size of this setup, the upside target naturally extends a lot higher. In fact, the measured move projects above the early 2024 high of 175. This would represent a substantial momentum swing, especially considering that up until April, the stock had been in a year-long downtrend. But as we’ve seen before, when PSX momentum flips from negative to positive, the trend can persist for quite some time. Another way of viewing this setup is through the key weekly moving averages—the 13-, 26-, and 40-week averages, shown here in green, blue, and red respectively. As PSX trended lower over the past year-plus, all three averages were sloping downward and frequently acted as resistance during failed rally attempts. However, beginning in mid-2023, when PSX finally stopped moving lower and began to rally, those same averages flipped from sloping down to sloping up. This was most noticeable when the 13-week average crossed above the longer-term averages, a classic signal of an intermediate-term momentum shift. From that point on, these averages provided support as the stock climbed to its highs. The hope now is that PSX is entering a similar phase in the second half of 2025, just as it did in the second half of 2023, which would suggest there’s considerably more upside to go. Adding to the constructive view, the 14-week RSI has consistently respected the midpoint 50 level over the past few months—another confirmation of strengthening momentum. PSX also is a holding of both the XLE (Energy Select Sector SPDR ETF) and the XOP (SPDR S & P Oil & Gas Exploration & Production ETF) . Both ETFs have struggled in recent years, but the broader picture shows a promising setup for both. While XLE hasn’t made much progress since 2022, it has managed to hold near its recent highs. This extended consolidation may prove constructive, as a decisive push back above the high 90s could trigger a momentum breakout, potentially carrying the ETF above its prior peak from 2014. The XOP ETF remains well below its 2014 high, as well, but it has been tracing out what looks like a 10-year potential inverse head-and-shoulders pattern. Patience still is required here, but a breakout above the neckline near 160 would open up a large “air pocket” of light resistance. PSX is only one component of both XLE and XOP, but if it capitalizes on the bullish patterns discussed earlier, it could set a precedent for other energy stocks to follow. That kind of broad participation would strengthen both ETFs and help the energy sector regain a more durable long-term uptrend. — Frank Cappelleri Founder: https://cappthesis.com DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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