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This is not an easy time to be an energy investor. However, it's important to remember that markets don't go straight up and that current challenges often present unique opportunities.

With energy stocks continuing to feel the seasonal pressure of lower energy prices and concerns over the economy, the temptation for many is to sell now and ask questions later.

While it is very difficult to catch a falling knife, the near-panic in many of the energy names suggests to me that we are getting very close to support from where many of these names will base and begin the next leg up.

Determining the "capitulation point" is more art than science, and admittedly, it is as much a gut feel as anything else. However, when most investors seem overly negative on the space and few are interested in writing a buy ticket, its time to start seriously thinking about new positions in the space. The negativity was summed up best by this moan from one portfolio manager on Thursday: "I feel like I lost my entire year in one day today."

It's important to remember, however, that inflection points are hard to pinpoint, and trading around those points can be very volatile. To help you determine where we are in this process, here are three variables to consider in the oil patch.

Clearly, commodity prices are most important, as they will set the tone for earnings expectations and signal investor sentiment about the economy. I continue to believe we settle in the mid-$40s in crude oil and the $6 range for natural gas. When the volatility settles down and prices settle in, it should once again become clear that those commodity price levels provide plenty of earnings power for both exploration and energy service companies.

In the next couple of weeks -- as multiples compress and earnings creep higher -- analysts will begin to upgrade the group, largely on valuation. While upgrades alone will not necessarily move the stocks, upgrades in an improving market should help to push energy stocks higher. In my view we are very close to levels where a host of brokerage houses (you always want to be first!) begin to upgrade many of these names.

With growing piles of cash, look for energy companies to start announcing and executing stock buybacks. From majors like

Exxon Mobil





to the service names like



, all are likely to make investments in themselves at these prices. And, history suggests that once a leader in the space makes a move, others are likely to follow.

If oil stays at $45 and natural gas stays around $6, the coming days and weeks may well present a solid opportunity for oil and gas investors.

Finally, use your weekends wisely. I always find it good to clear your head on a Saturday -- forget about the markets and do something with your family or to relax. Spend Sunday morning and early afternoon again doing things away from the market, and then spend a couple of hours in the evening preparing your mind for Monday's open. You'll be fresh and have a new perspective on how to tackle the coming week.

At time of publication, Edmonds was long Exxon Mobil, although holdings can change at any time.

Christopher S. Edmonds is partner and director of research at Pritchard Capital Partners, a New Orleans energy investment firm. He is based in Atlanta. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While Edmonds cannot provide investment advice or recommendations, he welcomes your feedback and invites you to send it to