Has the bottom in oil and energy stocks already come and gone?

Here are a couple of things to watch during the trading day:

Did everyone miss the bottom in oil as they debated how much lower it would go and where we’d store all the surplus fuel?

It’s starting to look that way. And with U.S. crude prices this morning on the verge of ticking positive for the year, we’ll probably hear more about oil and energy stocks being played for an upside trade.

Naturally, this talk will come with the aid of hindsight, which shows that oil has arguably been forming a stable base for the last three months between about $45 and $55 a barrel.

Oil and gas exploration stocks – including the SPDR S&P Oil & Gas Exploration and Production ETF (XOP) and bellwethers such as Schlumberger Ltd. (SLB) and EOG Resources (EOG) - are up solidly year to date after being savaged in the back half of 2014.

The bull case for the sector goes like this: The number of operating drilling rigs has plunged by some 50% in North America and should continue to drop in coming weeks. U.S. production has finally begun to ebb based on official stats.

The producer response was quick and decisive. Layoffs by energy firms should reach 100,000, says the Wall Street Journal.

News mentions of the phrase “oil storage” peaked last month as everyone got wise to the fact that there was little spare space in the country’s tanks for any more of the stuff. And yet as the storage theme got loudest, crude prices refused to make new lows, suggesting the market had discounted this fact as partly a matter of seasonal refiner slowdowns.

This was always a bear market driven by excess supply rather than a sudden drop in demand, and in fact the IEA is now forecasting a nice year-over-year pickup in energy demand for 2015. And, crucially, road miles driven in the States has picked up smartly, thanks to more people working and cheaper gasoline prices.

As for the stocks, earnings reports will be predictably ugly, and analyst forecasts will probably continue to slide for a while. Yet the sector trades at one of its steepest discounts to the broad market based on price-to-book values, so a lot of the bad news is in.

None of this means oil and energy stocks are up-and-away in a lasting way. Hedge funds have been a bit too eager to front-run a recovery here, and as noted the sector has already come a fair distance off its lows. It well could be that this is a mere reprieve for the group, a simple reversion to the upper end of the trading range that's almost played out.

But let’s listen to what the folks at Delta Air Lines (DAL) have to say about fuel-cost expectations later today as they report earnings. The stealth strength in crude might help explain why those airline stocks – a favored pick of traders heading into the year – have been such a disappointment so far.

Speaking of big disappointments: Some nearly forgotten underachievers from past boom cycles are starting to show some life thanks to the promiscuous corporate-acquisition environment.

Two companies long past their heyday with stock prices under $10 have entered the M&A conversation, in a reminder that cheap debt and flush corporate balance sheets are making it a seller’s market.

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Alcatel-Lucent (ALU), trading at one-twentieth its year 2000 peak price, formalized a deal to be acquired by Nokia. The shares popped 13% in anticipation Tuesday, and look to give some back as detailed terms emerge.

Related communications-equipment names such as Ciena Corp. (CIEN) and JDS Uniphase Corp. (JDSU), perked up on the consolidation talk and will stay in focus among traders who felt it safe to ignore them - until now.

Avon Products Inc. (AVP), whose peak was really more than 40 years ago in the Nifty Fifty growth-stock era, has reportedly capitulated to reality and is exploring a possible sale of all or part of the company.

There’s little chance Avon will get close to the $10.7 billion that Coty Inc. (COTY) and Warren Buffett offered it in 2012 – which is two-and-a-half times Avon’s present market value.

But the fact that Avon shares ramped by 14% Tuesday means traders realize that in this fizzy part of the bull market cycle, discarded brand-name stocks can plausibly find a suitor with lots of ready cash to throw around

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