The energy complex continues to be one of the more intriguing sectors on the market radar not because the fundamentals are strong, but because the technical picture is starting to improve, both from a broad sector perspective and in many individual names. This includes larger players like Suncor (SU.TO) and Imperial Oil (IMO.TO), as well as a group of smaller producers such as Baytex (BTE.TO), Parex (PXT.TO), Paramount (POU.TO), and NuVista (NVA.TO). There have also been constructive technical signs coming out of the infrastructure/utility side, names like TC Energy (TRP.TO), South Bow (SOBO.TO), and Pembina (PPL.TO) are starting to show life on the P&F charts. To illustrate these developments we have added the P&F chart of the SIA Energy Equal Weight Index where on an equal weight basis the chart is breaking out to new highs.
The challenge, however, is that many of these names are not yet in the favored zones of their respective SIA reports. As SIA practitioners understand, the point-and-figure relative strength methodology doesn’t reward premature anticipation; we wait for confirmation. It’s not our practice to "anticipate the anticipators."
That said, seasoned readers may recall our analogy: when a sector rotation begins, it often plays out like a bag of microwave popcorn. At first, only a few kernels pop. The bag sits mostly quiet, with just the occasional sound. Then, as the heat builds, the activity intensifies. Eventually, the bag fills with a flurry of popping...but wait too long, and the early fluffy ones get scorched. If that analogy holds true, we may be hearing the first few pops in energy — technically, not fundamentally. Imperial Oil, in particular, looks like one of those early movers, especially on a relative strength basis. The sector overall remains in the unfavored zone of the SIA Sector Report, but for those who are technically inclined, it may be worth reviewing the charts mentioned above. Tilt your head to the side, and you just might hear the first signs of momentum returning, not because the sector deserves it on fundamentals, but because the market is starting to act differently.
On the American side of the border, one name showing notable technical improvement is Xcel Energy Corp. (XEL). While it may look like a traditional, regulated utility, Xcel is quietly positioning itself at the forefront of long-duration energy storage innovation. The company is partnering with Form Energy to deploy two multi-day, 1,000 MWh iron–air battery systems at retiring coal plants in Minnesota and Colorado — among the first of their kind in the U.S. These batteries store electricity not just for hours, but days, offering a potentially game-changing solution to renewable energy’s intermittency problem. It’s still early and regulatory approvals are pending but if the technology proves out, Xcel Energy could be one of the first utilities in North America to own true baseload-scale storage powered by rust. Technically, XEL has broken out of a quintuple top on its Point & Figure chart, clearing strong resistance at $71.62 and rallying to current levels near $80. Initial support sits at the 3-box reversal level of $73.05, then at the original breakout zone of $70.21, with deeper support at $64.87. Using P&F vertical and horizontal count methodology, upside resistance appear at $98.31 and $100.28, suggesting the potential for a further run in this “blue sky” setup. XEL also sports an SMAX score of 8 out of 10, further supporting its improving relative strength, even though the stock remains in the neutral yellow zone of the SIA S&P 500 Index Report and currently ranked at spot #186.
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