Energy stocks are joining in on the rally to begin the new year after trailing in 2019.
One name is also flashing a technically bullish signal. ConocoPhillips, the third-largest company in the energy space, saw its 50-day moving average cross above its 200-day at the end of December. That move, called a golden cross, generally suggests upside momentum.
Matt Maley, equity strategist at Miller Tabak, said a break higher was overdue after a terrible year.
"One of the reasons for that, of course, is the group has underperformed so badly for so long. It's very underowned. And whenever a group breaks out or changes a trend early in the new year the institutional investors tend to pile into it for performance reasons," Maley said Tuesday on CNBC's "Trading Nation."
The energy sector was the worst performer in 2019, climbing nearly 8% compared with the S&P 500's 29% rally. ConocoPhillips added just 4%.
"On a technical basis, I also like the stock. If you look at the weekly chart, it's already broken above its two-year trend line going back to the very beginning of 2018. It's also broken above the neckline of an inverse head and shoulders pattern," Maley said.
"The other thing I'm going to be watching is it's 100-week moving average. That's provided very tough resistance over the last couple of months. So if it can finally break above that line, it's going to confirm that its trend has changed to the upside," Maley said.
Boris Schlossberg, managing director of FX strategy at BK Asset Management, agreed that this is the energy stock to watch in 2020.
"I also think ConocoPhillips is the right call here really on valuation measures. The energy sector has been beaten to a pulp. It's really a shell of its former self. And when that happens usually you have a lot of consolidation in the industry and ConocoPhillips is a very attractive target as well as just simply a stand-alone play that looks very good going forward," Schlossberg said during the same segment.
ConocoPhillips trades at 20 times forward earnings, while the XLE energy ETF trades with a 16 times multiple.
"They have a very strong plan going into the next decade where they're going to attempt to generate $50 billion of free cash flow, they're going to do a lot of asset sales and just essentially rationalize their operations all across the board," he added.
