Energy is at the bottom of the barrel.
The group has declined 11% in the past month, the only negative S&P 500 sector over that stretch. It was also the worst performer in 2019.
But, the energy space isn't a hopeless cause, says Bill Baruch, president of Blue Line Capital, who sees pockets of opportunity.
"Let's start with crude oil. This thing has sold off more than 20%, into bear market territory, but there is a lot of support at $49 as you can see in this chart going back to 2016," Baruch said Friday on CNBC's "Trading Nation."
Baruch is digging in on the exploration and production segment on the belief that crude may be bottoming. He says he's turned bullish on the XOP oil and gas exploration and production ETF, in particular, after getting bearish at the end of last year.
Within that ETF, Baruch says a few standout names could be worth a second look.
"WPX has rallied 40% in December. That is being dragged down right now by the entire sector. Apache, Occidental Petroleum, there's other names out there that I think have great support … and they're going to respond here," said Baruch.
"You want to look for a reasonable price-to-earnings [ratio], low debt on the balance sheet because I think that's the big problem with energy stocks right now. They've had to take on a lot of debt," Sanchez said during the same segment. "That combination makes Concho an interesting story."
Concho Resources has fallen 10% this year, in line with the XLE energy ETF. It is down a sharper 30% in the past 12 months, double the energy sector's losses.