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Today, we’re opening a new bearish trade on Halliburton Company (NYSE:HAL). Oil prices continued to fall last week, breaking through the up-trending support level that has kept them moving higher since last August.

It appears that larger-than-expected builds in gasoline and other distillates, according to the latest EIA report, coupled with strong production from OPEC member nations is weighing on oil and could send oil prices back down to the recent lows of $47 per barrel, or lower. This is putting pressure on HAL as lower oil prices will likely lead to lower activity in the oil sector.

HAL released its quarterly earnings last Monday, beating both revenue and earnings expectations, but the stock failed to rally with the rest of the market.

This tells us that the stock is weak from a relative-strength standpoint and that traders are likely rotating out of the industry. While there is likely to be some short-term support at $45, we are looking for HAL to drop down toward $42.

‘Buy to open’ the HAL June 45 Puts (HAL170616P00045000) for a maximum price of $1.70. 

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