Don’t expect the energy bounce to continue: Traders

Energy stocks were up in the just-ended second quarter, but experts say the rest of the year may not be so smooth.

"Right now, the options market is really suggesting that we're going to likely take a breather here," said Stacey Gilbert, head of derivative strategy at Susquehanna.

"Investors are more interested in protecting their gains so far," Gilbert said Thursday on CNBC's Power Lunch, citing the XLE energy ETF's 31 percent rise from the January lows, and 10 percent gain over the past quarter.

Some of the XLE's biggest components, says Gilbert — Chevron (CVX) and Exxon Mobil (XOM) — are seeing protective put buying. Both stocks were up 11 percent and 13 percent, respectively, in the second quarter.

Overall, said Gilbert, "I think investors are really just protecting some of the recent gains. It's not bearish, it's not bullish; it's protective."

Some experts say the energy sector may have seen its best performance for the year.

"The easy money, I think, has been made," said Nick Colas, chief market strategist at Convergex.

Colas says recent headwinds like the falling dollar, turbulence in the global economy and less money flowing into energy ETFs in the second quarter than the first may point to a more difficult rest of the year.

"We like the group," Colas said on "Power Lunch," "but it's going to be a much tougher slog in the second half versus the first."


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Brian Sullivan

Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

Read more