S&P Top Stocks For April Dominated by Oil Sector

Shares of Southwestern Energy and Cabot Oil & Gas could outperform next month

by Alex Eppstein

Published on Mar 24, 2017 at 2:15 PM
Updated on Jun 24, 2020 at 10:16 AM

Oil stocks have been sinking recently amid persistent concerns over rising U.S. crude inventories. But, while the fundamental picture is troubling, historical data suggests energy shares could break out in the month ahead. Per the chart below, oil stocks have been some of the best S&P 500 Index (SPX) performers over the last five Aprils, with shares of Southwestern Energy Company (NYSE:SWN) and Cabot Oil & Gas Corporation (NYSE:COG) leading the way.

top stocks in april

Southwestern Energy Stock Verging on Golden Cross

SWN stock has been positive in each of the past five Aprils. Moreover, the shares have posted an average one-month return of 19%. SWN definitely could use a seasonal boost, considering it's nearing its annual low of $7.02, touched one year ago today. At last check, the stock is up 1.1% at $7.62.

There's reason to be upbeat, though, beyond SWN's historical April outperformance. A closer look at the charts reveals the stock's 10-day moving average is about to cross over its 20-day, which carries bullish implications -- triggering a rally as recently as November.

Options traders have been banking on a bounce for Southwestern Energy shares, as well. The stock's 10-day call/put volume ratio of 9.78 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the bullishly skewed 96th annual percentile. Echoing this, SWN's Schaeffer's put/call open interest ratio (SOIR) of 0.45 is seated below 97% of all readings from the last year.

Cabot Oil Options Traders Aim at April Upside

COG stock has been very impressive in April, too. Over the past five years, the shares have ended the month higher, sporting a typical gain of 9.4%. The stock is asserting itself today, too, up 3.3% at $23.61, bringing its post-election gains beyond 15%. Last but not least, the shares have climbed back atop their 50- and 160-day moving averages.

Options traders have high hopes for Cabot Oil & Gas stock. At the ISE, CBOE, and PHLX over the past two weeks, 12,258 calls have been bought to open compared to just 28 puts. Seeing the biggest increases in open interest during that time frame were the out-of-the-money April 24 and 25 calls, where buy-to-open activity is confirmed by data from the major exchanges. In other words, options traders expect COG shares to make a meaningful move higher through front-month expiration.

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