One subscriber to Real Money asked me about Schlumberger (SLB) so here’s my latest take of the indicators and the price action.
In this daily bar chart of SLB, below, we can see a small August-October double bottom pattern. Trading volume looks like it is heavier on the second low and that is a good sign in that buyers stepped up the pace of activity when the retest held.
Prices just moved above the declining 50-day moving average line and are less than five dollars below the declining 200-day moving average line.
The On-Balance-Volume (OBV) line made lower lows from August to October but both lows are above the December low suggesting the move is pretty washed out.
The Moving Average Convergence Divergence (MACD) oscillator is showing a bullish divergence in that it has made a higher low in October versus August. This indicator is not far below the zero line and a fresh buy signal.
In this weekly bar chart of SLB, below, we can see some positive developments and some bullish divergences. Prices are below the bottoming 40-week moving average line. Trading volume in August/October is heavier and suggests a change of hands or ownership from weak hands to stronger hands.
The weekly OBV line has not made a lower low since December despite prices making lower lows. This is a bullish divergence.
The 12-week price momentum indicator shows improving momentum readings since last December and this is another bullish divergence as prices have made lower lows. Bullish divergences from momentum and other indicators can foreshadow a reversal to the upside.
In this weekly Point and Figure chart of SLB, below, we can see a potential upside price target in the $58-$59 area.
Bottom line strategy: SLB and other energy names have been out of favor for a long time but now I am seeing some light at the end of the tunnel. Aggressive traders could go long SLB at $35 or better risking a close below $30 for now. $58 is our price objective.