Energy stocks just ended their worst month in seven years, but some see safety in the sector

A horrible October for energy stocks sent the group sharply lower for the year, but the sell-off has not deterred all investors from the oil trade.

One market watcher says the sector could in fact provide some safety in an unpredictable market.

"Their very defensiveness makes them very attractive right now in a volatile tape," Boris Schlossberg, managing director of FX strategy at BK Asset Management, said on CNBC's "Trading Nation" on Wednesday. "For example, Chevron and Exxon are both yielding more than 3 percent at this point and with higher crude they should actually print better numbers going forward."

The XLE energy ETF offers a 2.65 percent dividend yield, above the 1.85 percent yield for the SPDR S&P 500 ETF Trust. Chevron yields 4 percent, while Exxon yields 4.1 percent.

"If you basically assume that energy is not a secular short, that we're still going to be using oil going forward, both of these companies should bounce really nicely going forward," said Schlossberg.

The XLE closed October with a monthly loss of 11 percent, its worst month since September 2011. Prior to October, the ETF had surged 5 percent.

Craig Johnson, chief market technician at Piper Jaffray, also sees the sector offering some protection against a volatile market.

Investors are "looking for the escalators down, not the elevators down in this market. It's been a rough October," Johnson said on "Trading Nation" on Wednesday. "When you look at the energy names, it's a sector that hadn't performed very well but we're starting to see the relative performance of energy pick up."

Exxon Mobil's performance, in particular, suggest building momentum that could turn into a breakout, says Johnson.

"Exxon Mobil looks like a name that's been consolidating when you look at that chart over the past couple of years," Johnson said. "From our perspective, those kinds of charts usually resolve themselves to the upside, not the downside."

Chevron and Exxon could see some near-term volatility following their earnings releases Friday morning. Analysts expect Chevron to post a nearly 30 percent increase in sales, while Exxon is forecast to report 14 percent sales growth.

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Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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