"Energy will remain on the front pages of news short term," says sector expert Jim Farrish in his SectorExchange.com. "The outlook remains optimistic." Here, he looks at favorited ETFs in energy.

"Energy and basic materials hit new highs last week raising the question of whether the two sectors overpriced? Overpriced stocks can become more overpriced and trying to guess when a run is over is a dangerous game.

"I am of the opinion to let the market or sector tell me when the run is over. This is done through the use of stops. By raising (trailing) your stops along with the rise in price you are always protecting the growth of your position. When the run is over and your stop is hit you are not trying to make a decision with emotions but predetermined logic.

"I continue to like the outlook for these sectors. The demand for crude has not fallen as expected over the last 4-5 months and has continued to put pressure on the price of oil. In the absence of demand falling we don't expect prices to recede to any great extent.

"Speculation in the energy sector remains a challenge. Political and sabotage risk remain in play adding to the speculation built into the current pricing level. We don't see this doing anymore than moving up and down based on current events.

"Then there is the issue of the dollar and its impact on the price of crude. I don't see the dollar gaining in strength to any significant level short term. This in turn means the price of crude will continue to account for the devaluation of the dollar.

"All this added together gives me reason to believe the energy sector will see reasonable growth looking forward. There could be a testing of the recent breakout short term which could create a potential opportunity. Maintain stops according to the risk you are willing to accept in light of a potential move.

"The long term trend remains bullish and the recent breakout took out the twelve month consolidation pattern. The daily chart shows clearly the break to a new high and the short term bullish trend that started off the lows in January.

"The vertical move over the last four weeks does raise some short term concerns and, as noted, we would set stops accordingly for these positions.

"Among ETFs designed for investors to participate in energy, we would point to the iShares Dow Jones U.S. Energy Sector Index Fund (ASE: IYE). This fund marks to the DJUSEN index performance before fees and expenses. This is a non-leveraged ETF. Its general risk category is growth.

"The Ultra Oil & Gas ProShares (ASE: DIG) seeks daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of DJUSEN. The use of leverage magnifies the risk profile of this ETF. Its risk category is aggressive growth.

"This continues to be a long term play and nothing has changed short term or on the horizon. From here our approach has been to drill into the sector and find what is moving the index overall.

"Natural gas has moved up nicely over the last six weeks. We like the outlook for the sector as it gains traction as an alternative energy source along with the short term uptrend in play. The United States National Gas Fund (ASE: UNG) is the ETF for a play on natural gas."

Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.