“Energy stocks have caught fire on the heals of OPEC, +$50 crude oil, and the broader market rally. But the Energy Sector rally isn’t without its concerns,” according to See It Market.

Rebounding earnings are supportive of a more optimistic dividend outlook for the energy sector.

As ETF Trends reported earlier this month: While energy companies are expected to be the largest contributor to earnings decline for the S&P 500 in the third quarter, the stabilizing crude oil prices and potential production cutbacks from major oil producers could help support sector-related exchange traded funds.

“Energy stocks have broken out as both OPEC and non-OPEC members have agreed to production cuts,” adds See It Market. “The breakout is also on good volume…but internals still lag and valuations are very high vs. history and vs. intra sector. And, bullish sentiment is at extremes with bearish seasonals coming up in January as well.”

For more information on the energy sector, visit our energy category.