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FLAGS AND PENNANTS


Drilling Deeper For Oil Services

10/12/01 02:18:38 PM
by Austin Passamonte

The threat of interruption in global oil production could become a concern as world news events evolve in Asia and the Middle East.

Security:   OSX, HAL
Position:   N/A

Right now we have oil prices well off their recent highs and oil company stocks have followed suit.

Is this a good time to try buying solid companies near support or is that akin to catching a falling 55 gallon barrel full of crude?

Figure 1: Daily chart for the Oil Service Sector Index [OSX]
Graphic provided by: Quote.com.
Graphic provided by: QCharts.
 
The Philadelphia Oil Services Index has been walking down a defined regression (descending) channel since mid-July and remains within those boundaries for now. An ascending bullish triangle is witnessed within this channel and a break above 73 level or higher on a close could signal bullish times ahead. However, stochastic values remain poised in an overbought extreme and warn that a strong breakout move may be less likely than another bounce from support near 55 or lower first.


Figure 2: Daily chart for Halliburton [HAL].

Halliburton is one of the major components in this index and sports a mirror-image chart as a result. We see an ascending bull flag formation with overbought stochastic values and declining up-volume to support increasing pressure to the upside.

Breaking above this flag pattern on rising volume would be clear signs of a bullish reversal while waning up-volume or increasing down-volume would be fair warning that lower prices are ahead. Unless stock prices rise and break the bear flag pattern on strong volume to the upside, this recent exploration North on the chart may fail to strike pay dirt and necessitate a u-turn south before the next gusher is struck.



Austin Passamonte

Austin is a private trader who trades emini stock index futures intraday. He currently trades various futures markets from home in addition to managing a trader's educational forum

Title: Individual Trader
Company: CoiledMarkets.com
Address: PO Box 633
Naples, NY 14512
Website: coiledmarkets.com/blog
E-mail address: austinp44@yahoo.com

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Comments

Date: 10/26/01Rank: 4Comment: hi! thanks for nice article on oils.i am investing a family trust fund and am looking at mostly reits for high dividend but am looking at things like xto, cog, cocb, and some oils stocks for upswing over the next few months.is it a good bet that the oils stocks will rise over next 3 to 6 months? thanks tom phillips
Date: 10/30/01Rank: 5Comment: 
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