Halliburton Takes A Rest

11/14/06 08:44:28 AM

by Arthur Hill

After a big surge on high volume, Halliburton took a breather over the last two weeks. Traders should look for a breakout to signal a continuation higher.

Security: HAL
Position: Hold

Let's start with the weekly chart for some perspective (Figure 1). The Halliburton stock (HAL) formed a double top earlier this year and broke support in July. The support break confirmed the double top and projected a move to around 24 (42 - 33 = 9; 33 - 9 = 24). HAL reached 26.33 in early October and bounced back above 30 with a strong move in the last few weeks. Broken support from the double top (~33) became resistance and the stock stalled over the last three weeks. In addition, the 25-week moving average marked support in 2005 and early in 2006. This moving average marked resistance around 32.

FIGURE 1: HALLIBURTON, WEEKLY. HAL formed a double top earlier in 2006 and broke support in July.

Graphic provided by: TC2000.com.

Graphic provided by: Telechart 2007.

The stock is clearly at its moment of truth on the weekly chart, and a consolidation formed on the daily chart (Figure 2). The pattern over the last eight weeks looks like a sharp advance and a flat flag. Volume surged on the advance and the flag represents a rest or consolidation within the ongoing trend. A break above the flag highs would signal a continuation higher and target a challenge to the April high (~42).

FIGURE 2: HALLIBURTON, DAILY. HAL has notable resistance around 33. In addition, there is resistance in this area from the August consolidation and flag highs.

Graphic provided by: TC2000.com.

Graphic provided by: Telechart 2007.

As noted on Figure 2, HAL has lots of resistance around 33. In addition, there is resistance in this area from the August consolidation and flag highs. With so much resistance, HAL could fail near current levels and break flag support. A move below 31 would negate the flag and call for at least a pullback or retracement of the October advance. At worst, a lower high would form around 33 and a move below the October low would be expected.

Arthur Hill

Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.

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Halliburton Takes A Rest

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