The energy sector has gone from worst to first.
After trailing the S&P 500's other major stock groups in 2020, energy has emerged as a leader this year, far outperforming its counterparts with a 25% gain. It's also the top performer this month, up nearly 21%.
The sharp reversal has "caught a lot of people by surprise," Craig Johnson, senior technical research analyst at Piper Sandler, told CNBC's "Trading Nation" on Friday.
Now, they're trying to figure out whether the run is for real, he said.
"If we come back and we look at a chart of, say, the XLE, it's at a very interesting inflection point," he said, referring to the Energy Select Sector SPDR Fund, which tracks the group.
"You've made a very nice double-bottom low and it looks like … we're getting very close to reversing," Johnson said. "I think from here, people have to add energy exposure — begrudgingly."
Though the group remains a small part of most benchmarks, "you've got to buy the energy sector and at least start adding to positions," he said.
Johnson highlighted the stocks of Exxon Mobil and Pioneer Natural Resources, saying in an email to CNBC that if Exxon closes above $54 a share, it "should open the door to a new leg higher." Exxon rose by more than 3% in early Monday trading to $54.16.
Investors should also watch shares of Marathon Petroleum, BK Asset Management's Boris Schlossberg said in the same "Trading Nation" interview.
"It's the largest refiner in the U.S. It's just sold off its retail operations to 7-Eleven," said Schlossberg, managing director of FX strategy at his firm. "It's going to use that money to pay down debt and maybe buy back shares. It's got a 4.25% yield."
"If you want to get super fancy, you can sell the March $51 puts and get the stock 7.5% lower from the price here with a higher yield," he said. "I think it's going to benefit from the long-term move in oil. So, to me, that's going to be one of the better plays as we go forward."
Marathon Petroleum's stock popped 4% in early Monday trading to around $55.24 a share.
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