Monday’s first-of-the month stock market rally was broad and hefty and led by (of all things) energy stocks. While the price of oil remained under pressure on Monday, fund inflows and general early-month giddiness led investors to bid higher some of the sectors that had not yet seen much renewed enthusiasm.
Within the space, oil services firm Halliburton Company (NYSE:HAL) lifted nearly 2.4% on Monday and continued to build toward what should be a good-sized rally into early 2016.
To be clear, after a nonstop 12% rally in the S&P 500 off the late-September lows, I am not calling to chase this market higher at these levels … but I would be equally remiss not to point out the sector and group rotation that we have seen throughout the multiweek lift and that we again witnessed on Monday.
When Halliburton reported its latest quarterly earnings on Oct. 19, the company missed analyst estimates on both the top and bottom line. However, HAL stock found support after the numbers and has traded with an upward bias again.
HAL Stock Charts
It has not been a fun year-and-a-half for most investors in the energy space, as the price of oil dropped hard and most oil-related stocks followed suit. HAL stock lost 60% of its value from the summer 2014 highs into the lows of this past August.
As we can see on the below multiyear chart, however, despite the sharp drop, HAL stock in August managed to hold on to its multiyear line of support. At the bottom of the chart, I plotted the Market Vectors Oil Services ETF (NYSEARCA:OIH), which holds HAL as a component. The OIH also found support in August and is trying to push higher.
On the daily chart, we see that HAL stock since the late-August lows has developed a series of higher lows, and while any real upside momentum has not yet taken place, the climb and bottom-building process since has been systematic and orderly. The blue 100-day moving average has been firm resistance since early October, just like horizontal support near $37 has firmly held
The August swoosh lower in HAL stock broke its early 2015 lows, and after a volatile August/September period the early 2015 lows (black horizontal), have been overcome again.
Halliburton shares now increasingly look ripe to break past their 100-day moving average and rise toward the red 200-day, currently around the $42, which active investors could use as their next upside target.
Given the sharp broader market rally, however, I am not expecting this breakout to take place in a straight shot. Expect more consolidation and back-and-forth before HAL stock reaches the low to mid-$40s.
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Successful trading and investing starts with a plan. Download Serge’s essential trading plan, The Essence of Swing Trading e-book. As of this writing, he did not hold a position in any of the aforementioned securities.
