Relief over the US election result was short-lived as investors turned their attention to the fiscal cliff. However, MoneyShow’s Tom Aspray highlights some picks in the energy patch that could be flashing buy signals.

The close in the stock market Tuesday was surprisingly strong and while the major averages are still locked in their recent trading ranges there were some industry groups that appear to have completed their corrections.

It has been a wild ride overnight in the stock index futures as they sold off in early reaction to the Obama victory, but by 3:30 am had rallied back above Tuesday’s highs. The sellers then again took over as the S&P futures are down over 12 points. It will take significantly more buying than we saw early this week to signal that the market’s overall correction is over.

The gold futures have been able to hold their early gains Wednesday which suggests that the correction in the precious metals may be over. A strong daily close on Wednesday is needed to support the bullish case. As I discussed last month, I still think that the recent correction is a buying opportunity.

There was also positive price action in many of the energy stocks and the increasing volume is a positive sign. One popular energy ETF and three energy stocks look attractive for new purchases on a slightly pullback as relatively tight stops can be used.

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Chart Analysis: The Select Sector SPDR Energy (XLE) peaked in September at $77.35 and has tested the 38.2% Fibonacci support twice in the past two weeks. The Fibonacci retracement levels can be used to determine both entry and exit levels.

  • Tuesday’s close above the 20-day EMA is a positive sign with further resistance at $74.14 and the downtrend, line a.

  • A strong close above $75.20 should confirm that the correction is over.

  • The 127.2% Fibonacci retracement target is at $79.16.

  • The daily relative performance or RS analysis has closed back above its WMA, but a close above the resistance at line b is needed to confirm that the correction is over.

  • Volume picked up Tuesday as the OBV is also above its WMA but below resistance at line d.

  • The OBV formed a short-term positive divergence at last Friday’s lows (see arrow).

  • There is minor support now at $71.80-$72.20 and then at $70.40-$70.80.

  • The 50% retracement support level is at $69.19

Marathon Oil Corporation (MRO) moved above its previous two highs Tuesday, but has not yet closed above the resistance at line d.

  • MRO has tested the daily uptrend, line e, twice in the past two weeks.

  • The correction has held above the 38.2% Fibonacci retracement support at $28.37.

  • The relative performance made new highs Tuesday as it held well above its WMA and the uptrend, line e, on the current correction.

  • The weekly RS Analysis (not shown) is acting even stronger as it is well above its WMA.

  • Volume was almost double the daily average Tuesday (see arrow) and the daily OBV is close to breaking out.

  • There is first support at $30.40-$30.60 with further in the $29.50-80 area.

Next: A Look at Valero Energy Corp. and Hess Corp.

Tickers Mentioned: Tickers: XLE, MRO, VLO, HES, XOP