I wanted to highlight one Oil Service stock today even though we all know the energy sector is in the dog house with this administration and the potential restraints on the energy sector as a whole (XLE). Basically, the unknowns are still very much unknown. But after noticing the oil service group starting to perk up the past two weeks, I focused on watching SLB. Every time the energy group, and in particular, the service group would try to rally, SLB was making new highs first and would sustain those gains under most conditions. Even with the crude and $SPX choppy / weak action. I usually gauge this group (OIH) with the major oil plays like CVX, XOM and COP and have noticed that SLB and many Oil Service stocks have shown some nice relative strength. Even dips are bought up quite aggressively. But we are capped at resistance now across the OIH sector and we must see how they act under a pull back scenario. I ‘m talking about a real market pull back towards 1375 possibly?
I’m not ready to get long this group or SLB yet, but it I’m trying to build the case for a play in SLB for early next year and will observe it all month and compare the action to the following : XLE, XLB, OIH, $SPX.
We see from the chart above that SLB had a bad fall off a specific H & S pattern early in November. Lows were around 66.80. The small up-trend has the resistance level between 72 and 72.5. The trend shows nice higher lows practically daily and as I mentioned above, SLB is bought first and it can move fast to test daily range highs. This small up-trend is early, but showing signs of working off excess resistance from the November breakdown. The price is at congestion of the major moving averages as seen in the chart but the RSI is showing strength still. Two higher resistance levels stand out for me. They are 74.75 and 76.60’ish. If SLB should breakdown below 69.40 and close it can easily test the low ranges of early November and potential another larger leg down to 66-65 levels.
The Oil Service ETF (OIH) is a mirror image of SLB. It seems there are some early signs support the evidence of a group play and if I would pick one name, it would be SLB.
Disclaimer: The material provided is purely for educational purposes only. No information contained herein is a solicitation or offer to buy or sell any securities. The information provided is in no way investment advice from Nick Pirraglia, TradersThinkTank or any other contributed content. The opinions, analysis and commentary on this website are purely the subjective views of the author. Nick Pirraglia is not a Registered Investment Advisor and under no circumstances should any content from this site be used as investment advice, recommendations, or trading advice. Please consult your financial advisor prior to making investment decisions.