Energy stocks aplenty are suffering amid the renewed downturn in crude oil prices. Since peaking at $62.58 in late May, crude has fallen 20%, tagging $50 just yesterday.
While oil remains well above the depths plumbed during the final throes of the recent oil crash, many oil stocks are tumbling to new lows.
And yet, pockets of strength remain.
The Market Vectors Oil Services ETF (OIH) has held major support so far and is holding up a touch better than most other energy-related funds. A number of its constituents look to be carving out potential bottoms.
Traders looking to snatch up oil stocks on the cheap should be eying the recent relative strength with interest.
Here are three oil stocks worth consideration for bottom fishers.
Oil Stocks Carving Out a Bottom: Halliburton (HAL)
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Shares of Halliburton (HAL) have rallied notably following Monday’s earnings release creating a trifecta of bullish omens.
First, the ascent has been accompanied by a pair of accumulation days. These high-volume up days suggest the return of institutional buying that has been so desperately needed in HAL stock.
Second, the latest pivot low was shallow enough to create a momentum divergence signal from the popular RSI indicator. This bullish signal suggests the momentum of Halliburton stock’s downtrend is waning.
Third, this week’s surge was sufficient in carrying HAL all the way to prior resistance setting up a potential breakout play.
Should HAL break above $42.90 resistance, buy the Oct $42 call option.
Oil Stocks Carving Out a Bottom: Baker Hughes (BHI)
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Baker Hughes (BHI) and Halliburton are birds of a like feather — fair, considering the two are still in the process of having their merger evaluated — and the technical posture of BHI stock is virtually identical to HAL.
BHI rallied following earnings, has a pair of accumulation days, is knocking on the door of a breakout, and has RSI divergence to boot. What I particularly like in Baker Hughes is how it remains well above its 52-week low notched late last year near $48.
Though many energy stocks are diving to new lows in response to oil’s newfound weakness, the recent drop in BHI has been shallow by comparison showing notable relative strength.
Unfortunately, Baker Hughes does fall short in the liquidity department. Its options are extremely inactive, so those jockeying for a bullish position in the stock should stick with buying shares of the underlying.
Buy shares of BHI on a break above $61.50.
3 Oil Stocks Carving Out a Bottom: Schlumberger (SLB)
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Schlumberger (SLB) rounds out our trio of candidates.
Increased aggression by dip buyers created a higher pivot low this past week which has improved the posture of its short-term trend.
Things look quite constructive on a longer-term time frame as well. The stock has been able to carve out higher lows for its major pivots since bottoming in January.
The recent consolidation in SLB stock over the past week is setting the stock up nicely for a potential breakout play over $85. A successful breach of this ceiling could spark a rally back to the 50-day moving average near $88.
SLB has taken out $85, making the Nov $85 call options attractive.
As of this writing, Tyler Craig did not hold a position in any of the aforementioned securities.
