’Fasten your seatbelts’— BTIG strategists warn of coming turbulence
Investing.com -- Energy stocks may have surged on geopolitical tensions, but BTIG believes the sector still has room to run.
In a recent note, analysts argued that “an imminent escalation in the Middle East wasn’t part of our bullish thesis from last Wednesday, but it certainly provided a big tailwind.”
Despite the rally, they cautioned against taking profits too early. “While a geo-political impulse is often an excuse to take profits, we still think the April gap needs to get filled on XLE (NYSE:XLE) around $93,” they wrote, adding: “Near-term shakeouts aside, we would stick with the trade here.”
The note highlighted improving technicals across the energy space. “XOP is clearing its downtrend and 200 DMA, and there are more and more constructive charts popping up,” BTIG said, citing strong names like AR, HAL, MPC, and RRC.
Outside of energy, the firm expects a mixed summer for broader equities.
“SPX into formidable resistance (6050-6150), and we continue to expect a ’choppy summer’ for SPX,” the analysts wrote, with key support at 5800.
Meanwhile, small caps are holding their ground. “As long as that continues to hold, we would give bulls the benefit of the doubt.”
In tech, software remains strong. “IGV sitting just under highs,” BTIG noted.
However, they flagged some concern about overextended names: “High-momentum stocks were showing some early signs of exhaustion last week, and we got tactically cautious.”
Overall, despite volatility and geopolitical noise, BTIG says energy still looks strong, and it’s too soon to fade the move.