“This is the first time fundamental and technical analysis on energy services have both pointed to larger gains in more than five years. We’re early in the cycle.”
Chris “CJ” Johnson, Lead Host & Senior Analyst, Monument Traders Alliance
Dear Reader,
The Super Bowl and Winter Olympics have me thinking about comebacks. But instead of Patriots dynasties or Olympic heroics, let’s talk about a comeback that will actually make you money.
Save your money on Super Bowl advertisers – they crash in February. Every. Single. Time.
Let’s talk about a comeback that’s been more than five years in the making…
Drill, Baby, Drill
The Trump administration’s first run promised energy independence with “Drill, Baby, Drill” as a key campaign slogan. Maximum U.S. oil and gas production by expanding federal lease sales, streamlining regulations, and rolling back environmental restrictions.
It crashed and burned – a spectacular 91% wipeout that turned believers into skeptics.
From January 20, 2017, to January 20, 2021, the SPDR S&P Oil & Gas Equipment & Services ETF (XES) was the worst-performing ETF among widely traded industry investments.
The XES invests in the “tip of the arrow” in energy – companies drilling, digging, fracking, and servicing wells. Rig operators, well service crews, pressure pumpers, and the suppliers that keep the machines running.
This should have been the industry with the best performance based on “Drill, Baby, Drill.”
What happened?
Oil services ran into brutal headwinds. Shale overproduction capped crude prices and squeezed service margins. Capex stayed tight, steel tariffs hiked costs, and the 2020 pandemic oil crash wiped out rigs.
But now, oil services are back. And this time the setup is global…
New Frontiers
The recent shift in geopolitical policy is opening new frontiers for drilling, exploration, and infrastructure work.
The U.S. greenlit diluent exports to Venezuela and eased sanctions. This unlocks one of the world’s largest oil reserves and sets the stage for a multiyear services cycle as rigs, crews, and equipment return to restart long-idled fields.
Middle Eastern producers are expanding development projects with billion-dollar offshore service contracts.
Global capex isn’t just surviving – it’s expanding.
Here’s why the technicals confirm what the fundamentals are telling us.
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Technicals Are Strong and Gaining Speed
Since bottoming in 2020, XES shares shifted into a new long-term bull market in February 2021. That bull market has delivered gains of more than 100%, and the trend is heating up.
XES shares are moving above the $100 price level for the first time since May 2019.
$100 is a proven psychological hurdle. Round numbers act as built-in resistance because investors like keeping things simple. We often see hesitation at $100 as investors use it to trigger profit-taking.
The Oil Services ETF is ripping through that price without looking back.
The XES’ 50-day moving average shifted into a new bullish pattern in October, indicating a 4-6 week bullish outlook with potential target of $125. Strong momentum is driven by positive breadth among constituent companies like Transocean (RIG), Halliburton(HAL) and NOV Inc. (NOV) – all outperforming as relative strength leaders.
This is the first time fundamental and technical analysis on energy services have both pointed to larger gains in more than five years. We’re early in the cycle.
My “Keep It Simple” Approach
First, exposure using the SPDR S&P Oil & Gas Equipment & Services (XES) with a simple buy-and-hold strategy.
XES shares have a 3-6 month target price of $125. My longer-term 6-12 month outlook targets a move to $150.
Equipment and services stocks trade with more volatility than larger energy names. Consider that volatility just noise in a long-term bullish trend that will pay patient investors handily.
YOUR ACTION PLAN
I love buying industry ETFs long-term. But I also love finding trades within ETF holdings to increase overall profits. Go long the silver ETF and buy a call on Wheaton Precious Metals – that approach.
I went through the top components of XES and found a single-stock setup on Transocean Inc. (RIG).
Last week, I identified RIG as a breakout candidate heading toward a break above the psychologically significant $5 price. Historically, a break of this price signals preparation for a run to $7.50.
Hall of Fame Traders Jon Najarian dropped Transocean on the Monument Traders Alliance LIVE audience Wednesday during our AI Trade Monster Summit. It was on his short list of plays from his proprietary TradeMonster.AI software. (Miss the event? Catch the replay here!)
The last time TradeMonster.AI flashed a bullish signal on RIG was November 10, 2025. Yesterday the stock traded as high as $5.35 – gains of 27.4%.
With Transocean shares seeing a slight pullback today, I’m looking to purchase the June 17, 2027, RIG $5 calls at $0.71 or $71 per contract.
My 3-month target price on the stock is $6.50 – targeting 100%+ profits based on intrinsic value alone.
The total return will be higher if Transocean hits my target given time premium.
We can dive deeper into this during my Monument Traders Alliance LIVE session next week.
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Monument Traders Alliance, LLC
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