Judy,
I just did an analysis of Crude charts for October, November, and December 1998 delivery. Since Oil Service stocks are tied for better or worse with the commodity, I think you might find the answer your looking for within my commentary of the charts. I'll handle the p&f for SLB in a separate post. What I'm unsure of, is which of the charts, Oct., Nov., or Dec. carries more impact and has the greatest implication for the Oil Service stocks and also for the Oil group. Here's what I found:
October Crude: Bearish Resistance Line (BRL - the major downtrend line from October '97 at $20.50) is at $15.20. To resume an uptrend and switch from bearish to bullish on it's p&f chart, the price of a stock or commodity must break through the BRL with a buy signal. October Crude gave a p&f buy with a Double Top buy signal at $13.60 and broke through $13.80 where the chart had topped out 3 times in August. This carries more bullish implications
than the movement to $13.60. This is the closest this chart has been in a column of X's (rising prices) to the BRL since May when the chart was in a column of X's at $17.40 and the BRL was at $18.20. Being close to the BRL in May, however, did nothing to stop the commodity's decline and only an upside break will turn the chart bullish one again. The price objective for this buy signal is $14.50, so this suggests that this chart has exceeded it's
upside target and it is questionable if this current move is enough to carry the commodity above the BRL. The chart is in a column of X's at $14.90. Since p&f charts only move in one direction per day, the October crude contract hit a high of $14.90 on Friday but closed at $14.59. This will cause the chart to reverse on Tuesday unless the October contract can get to $15 or higher. Next sell at $13.20
November Crude: BRL from 10/97 at $20.40 now at $15.50. Needs to break this downtrend line with a buy to turn the chart bullish Triple Top buy signal at $14.20 with a price objective of $18.70. The price objective on this chart suggests that a break of the BRL is a strong possibility. Next sell on the chart is at $13.20.
December Crude: BRL from November '97 at $20.20 now at $15.10. Unlike the other two charts, the December crude p&f chart has broken through it's BRL with a buy signal at $15.20. The chart shows a Double Top buy signal at $14.40 and shows that the December contract has overcome $14.40 where the chart topped out twice before in August. The price objective is $18.70. The next sell is at $13.50.
The December Crude contract can now be said to have resumed an uptrend since it is the only one to have broken it's BRL. Since the chart's trend is now bullish, we can draw in a Bullish Support Line (BSL) from the low made prior to the break of the BRL. This BSL is now at $13.70. The December crude contract is now bullish.
I look forward to commentary from those with experience with the commodity that will discuss the meaning behind a bullish December contract and a possibility of the November contract turning bullish if it is able to meet it's price objective.
Best to all,
Bruce
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