After a blockbuster start to the year, energy stocks have been range-bound. But one top technical analyst says a group within the sector is poised to charge higher.
Oil refinery stocks look particularly well-positioned, according to Ari Wald, head of technical analysis at Oppenheimer. He gushed about one refiner within the group, Andeavor, in a recent note to clients, "What a Great Chart: Buy ANDV."
He explained on CNBC's "Trading Nation" why he's so bullish on refiners, and on Andeavor in particular. Here's what Wald said.
The oil refinery group is well-positioned due to broad-based strength, as well as relative strength.
Shares of oil refiner Andeavor have soared 32 percent this year, far outperforming the energy-tracking XLE ETF, which has risen 7 percent during the same period. Crude oil, meanwhile, is up 15 percent this year.
While the rest of the energy sector is retracing losses dating to the sector's 2014 peak, Andeavor shares are breaking out to fresh all-time highs. This is a mark of leadership, and should continue.
Ultimately, Andeavor is poised to rise to $170 per share, implying a 12 percent rally from current levels. That's determined by taking the height of the stock's prior trading range, between $70 and $120 per share, and projecting the upward move from the $120 breakout level.
Bottom line: Oil refinery stocks, and specifically shares of Andeavor, should see continued upside, according to Wald.