The energy sector has held up well during the market correction, with crude oil, solar, oil and gas exploration, and oil services all showing tight price action on the weekly chart.

The iShares U.S. Oil & Gas Exploration & Production ETF ($IEO) has been trading in a tight range for several weeks, just below the highs of the current base. On the weekly chart below, we see the price action tightening up while holding above the rising 10-week moving average:



On the monthly chart, we see that $IEO is poised to clear the highs of 2011, which could enable it to surge much higher due to a lack of overhead resistance:



We have placed $IEO on today's watchlist, as we are looking for a potential breakout to new 52-week highs within the next few days. Subscribing members of The Wagner Daily should note our exact entry, stop, and target prices for this trade setup in the "watchlist" section of today's report.

Also in the energy sector, we continue to hold our existing positions in Guggenheim Solar ETF ($TAN), US Crude Oil ($USO), First Trust Natural Gas ($FCG). Of the three, $TAN is showing the most relative strength lately, as the trade is now showing an unrealized gain of just over 20% since our original buy entry. It is also poised to break out to a new high, at which point we may add to the existing shares.

Deron Wagner is the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, and MorpheusTrading.com, a trader education firm.