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Trade of the Day: Halliburton (HAL)

The time is just right for this top operator in a successful sector


Monday’s session appeared to be pretty typical of the day after a major run-up, as investors lacked much motivation to buy more but also were not quick on the trigger to sell much either. Volatility rose a bit, and prices were a bit depressed, but nothing super-special. Must be summer.

The biggest driver, if forced to name one, was fear that the United States and the eurozone are on a collision course with Russia over the handling of the Malaysia Airlines shoot-down. EU foreign ministers were meeting all day to discuss further sanctions against Moscow, but the confrontation is complicated by the fact that so many of these countries depend on Russian oil and gas.

Meanwhile, there was frustration regarding access to the jetliner crash site and growing anger over the handling of victim’s bodies by Ukraine separatists. There was more fighting in Donetsk, which is the center of the pro-Russian separatist uprising, and separatists accused government forces supported by artillery of attempting to enter the city. Kiev denied sending the regular army into the city proper and said that it was small “self-organized” pro-Ukrainian units fighting separatists within the city limits.

Down south in the Middle East, fighting intensified in Gaza as Israeli forces continue to seek and destroy Hamas tunnels. The death toll rose quickly as the Israeli military fought Hamas militants in Shejaiya, an eastern neighborhood of Gaza City. The Israeli military stated that it had recently stopped two more infiltrations by Hamas militants using tunnels into Israel from Gaza.

There is growing international concern about the escalating situation, and Secretary of State John Kerry is headed to Cairo to discuss a potential cease-fire. However, Israeli Prime Minister Benjamin Netanyahu stated that the assault would continue until it achieved its aim of restoring quiet to the citizens of Israel for an extended time.

This all had the effect of keeping crude oil and gold bullion prices at relatively elevated levels, which in turn kept the shares of these companies buoyant as well. The trade I’m recommending today is one such company that tends to do very well this time of year.

Halliburton (HAL) is an oilfield services giant that we have successfully traded many times in the past at Trader’s Advantage. It caught my eye when it came in for a touch of its 25-day average again, and HAL shares were up as much as 1.5% early Monday morning following a great earnings report that lead to several upgrades and target lifts. The shares then traded lower through the rest of the session, briefly sinking into the red. I don’t expect a sell-off in these shares, as Halliburton is one of the best operators in the most successful sector, so let’s use this dip as a buying opportunity.

Buy HAL common for target $73.50. Option traders can also consider buying the HAL Aug. $70 calls, which also did well early in yesterday’s session before ending flat. My target for the calls is $3.10.

Jon Markman operates the investment firm Markman Capital Insights. He also offers a daily trading advisory service, Trader’s Advantage, and CounterPoint Options, a service that helps individual traders make steady, consistent profits with volatility-related instruments.

Follow Jon Markman at Google+.

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