Buy Murphy Oil And Hess Corporation

The S&P and NASDAQ have both broken out of falling wedge patterns, supported by higher lows in momentum. The ten-day breadth moving average also shows higher lows. Most important, the number of new lows has stopped expanding and was at a very reasonable level on Friday. On the NYSE, advancing volume exceeded declining volume by two to one. On the NASDAQ, the number is three to one. This is enough evidence to support a rally into April.

Here is a screen of stocks that are highest rated in two categories in the coming period. The seasonal rank is listed in the first column, and the relative strength rank is in the second column. The issues are ranked by a combined score. Murphy is at the top. It is the 25th highest for seasonal strength in the S&P 500. In relative terms, it is the sixth strongest stock in the index.

Bullish S&P 500 Stocks

From this list, the stocks are screened for relative strength and by dynamic cycles. The latter term refers to the most active cycles that are generating profits now. I expect the price of oil and energy stocks to rally into April so these selections can be held beyond this week.

Murphy Oil is number one on the screen. In April, price has risen 71% of the time over the last 42 years for a gain of almost 6%, the strongest month in any year. Price could rise closer to $45 in the short-term and to $50 in April.

Chart 1

Hess Corporation is ranked second. In April, the stock has risen almost 81% of the time for an average gain of about 5%. The stock is likely to rise to $105 over the short term and over $110 in April.

Chart 2