Three weeks ago, with drilling stocks just past a record high, we warned subscribers to sell the most overextended winners into the coming correction. Sure enough, the sellers showed up and brought the overbought SPDR S&P Oil & Gas Exploration and Production ETF (NYSE: XOP) down a couple of pegs, right to its still sharply ascending 50-day moving average.

There have been plenty of good reasons to lighten up. The main one is that West Texas Intermediate crude that traded near $110 a barrel in early September had drifted all the way down to $93 as of Nov. 12. Demand from US refiners coping with low cracking spreads has understandably waned this fall once the driving season ended, and before the heating season got underway. Also, the US made progress in nuclear talks with Iran, holding out the possibility, however remote, of an end to the Iranian trade embargo, which has (helpfully for the oil bulls) bottled up that country’s already ailing crude output.

The broader market rally that has lifted the S&P 500 to a record high on Oct. 29 paused there and then to test investors’ reaction to the earnings deluge and an uptick in interest rates on the back of stronger economic data. No surprise then that from its intraday high on Oct. 21 the XOP corrected 10 percent by the Nov. 7 close at the lows.

Since then, the price has tracked the rising 50-day, supported by the generally very strong results drillers have been reporting even as the share buyers went on strike.

We’re not quite ready to buy the dip but will probably get there soon, as it might not last that much longer. Crude prices have merely returned to their longtime trading range, and it will take more than a tentative deal with Iran to knock them lower given the high cost of marginal production, chaos in Libya and, increasingly, Nigeria, and continued growth in Asian and Latin American demand.

So this is an opportune time to check who’s weathered the correction best among portfolio picks and stocks we might opt to add in the not-too-distant future. If this proves to be nothing more than routine profit-taking as we expect, then these sector leaders should pace the next leg higher.

Among portfolio picks other than First Solar (Nasdaq: FSLR), no stock has looked better than oil services leader Schlumberger (NYSE: SLB), which has corrected mostly sideways since hitting a two-year high on Oct. 22. (See the earnings review of this Growth Portfolio Best Buy from the last issue for some clues as to why.)

Similar marked reluctance to sell after the strong recent gains has been evident in the price action of such Growth Portfolio names as reservoir management specialist Core Laboratories (NYSE: CLB), contract driller Helmerich & Payne (NYSE: HP), energy infrastructure builder Chicago Bridge & Iron (NYSE: CBI) and oil producer Occidental Petroleum (NYSE: OXY).

Recently strong Bakken oil producers Continental Resources (NYSE: CLR), Oasis Petroleum (NYSE: OAS) and Whiting Petroleum (NYSE: WLL) have all suffered somewhat larger but still modest hits, and all have found the support at the rising 50-day moving average.

In contrast, gas producer Chesapeake Energy (NYSE: CHK) pierced its 50-day in response to a disappointing production forecast, while WPX Energy (NYSE: WPX) plunged all the way to its 200-day moving average as costly discounts on a legacy gas supply contract expiring next year taxed the bottom line. Gas-heavy Devon Energy (NYSE: DVN) held up considerably better.

Beyond our portfolios, Schlumberger rival Halliburton (NYSE: HAL) has also been on fire, refusing to correct at all and hitting fresh two-year highs instead. Oil and gas producer Noble Energy (NYSE: NBL), a company we profiled earlier this year, has also flashed strength after breaking out to new highs during October. Midcap mid-continent producer Cimarex Energy (NYSE: XEC) has retained bullish posture as well alongside small-cap Eagle Ford and Niobrara explorer Carrizo Oil & Gas (NYSE: CRZO) and the much smaller Hugoton spec play Gastar Exploration (AMEX: GST). If this correction proves as shortlived and limited as we expect, we should  be revisiting some of these names soon in quest for new portfolio picks.

But we are already positioned in many of the best performing names, and the main challenge with these should be to properly time purchases and size positions. Our advice three weeks ago to take profits on the drillers and redeploy some of the cash into refiners has paid off so far. In the weeks ahead we’ll be recommending other attractive destinations for that cash.