Renewables vs fossil fuels: how to play the energy sector right now?

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Oct 12, 2021
  • Solar stocks climbed to push Invesco Solar ETF (TAN) up more than 5.0% today.
  • Matt Maley suggests investors wait for TAN to break above the 200-Day MA.
  • Gina Sanchez picks solar stocks over oil and gas firms for long-term investors.

Solar stocks climbed on Tuesday to push the Invesco Solar ETF (TAN) up more than 5.0% to $86 that still represents a close to 20% decline year-to-date. In comparison, XLE that tracks the legacy energy companies is up nearly 50% this year.

Evidently, investors have two possible ways to play the energy sector from here; they can either switch to solar stocks in hopes of a further upside or stick to fossil fuels in hopes that the rally is not over yet.

Matt Maley is watching the 200-Day MA in TAN

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According to Matt Maley of Miller Tabak, investors interested in solars should wait until TAN breaks above its 200-Day moving average. On CNBC’s “Trading Nation”, he said:  

TAN has bounced off the $77 level (higher low) several times recently. Now we have to see it make a higher high. So, if it can break above its 200-Day moving average in a meaningful way, that’ll give it the upside momentum to play catch up with the rest of the energy sector.

The 200-Day MA currently stands at around $90 level.

Gina Sanchez also picks renewables over fossil fuels

During the same interview, Chantico Global’s Gina Sanchez also favoured renewables as a better pick for long-term investors than the oil and gas companies. She said:

XLE is coming out of a deep trough. Oil and gas companies have had a terrible decade. It hasn’t been a great bet because it lacks the long-term driving factors whereas the long-term story for renewables and energy transition is still there.

Sanchez sees the dip in alternative energy as a buying opportunity for investors.

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