Oil prices have fallen, and they can’t get up. Many are finding crude’s inability to recover at all disconcerting. Particularly for energy stocks which have suffered alongside the oil plunge.
Let’s look at the numbers. Oil peaked at $76.90 in early October and then fell virtually uninterrupted to $49.41. A 36% swan dive in less than two months. Then, with the rubber band stretched tautly, we snapped back right?
All the beaten-down commodity could muster was a lousy $5 pop from $49 back to $54 before getting slammed anew. Cratering almost $30 only to rebound $5 reflects ultimate weakness. Since then oil has built a low basing pattern that appears on the cusp of breaking down.
More pain looks to be coming to an energy stock near you. Let’s look at three that remain vulnerable.
3 Energy Stocks to Sell: Apache Corp (APA)
Since peaking north of $50 in October, Apache Corp (NYSE:APA) shares have slid over 40% to a new 52-week low. But calling it a one-year low doesn’t fully convey the gravity of the damage. With the recent thrashing, APA has officially reached a new 16-year low, revisiting levels untouched since 2003.
With the price trend pointing lower across all time frames and the 200-day, 50-day, and 20-day moving averages all heading southbound, APA is undoubtedly worthy of a short trade. Given its oversold status, some backing and filling may be in order before a low-risk bear play sets up.
Consider a rally toward $34 an opportunity to deploy new short trades.
3 Energy Stocks to Sell: Halliburton (HAL)
Falling oil prices have been particularly hurtful to oil service companies like Halliburton (NYSE:HAL). With December’s drubbing, the year-to-date losses have now grown to 41%. Shareholders seeking relief will be happy to learn that HAL stock is testing a major decade-long support zone at $27.
The potential floor could spark a recovery attempt in the short run, but given the heap of overhead resistance, I suspect any strength that we see from here will be temporary.
Ever since the January surge, rallies have all been sellable events this year. So let’s not overthink this. The trend should continue to be a friend to bears.
3 Energy Stocks to Sell: Schlumberger (SLB)
Our final selection hails from the same industry as its predecessor: oil services. Indeed, Schlumberger (NYSE:SLB) is the largest oil services company on the planet. But when it comes to stock performance, large does not equal better. SLB stock’s year-to-date losses have tracked Halliburton’s near 41%.
Furthermore, their daily trend posture looks virtually identically with major moving average stacked atop the declining price in bearish fashion. On the longer time frame, however, SLB looks a great deal worse. With the 2018 price dive, Schlumberger has now returned to the depths of the 2008 crisis.
While oversold conditions could spur a relief rally, it will be much more attractive as a selling event, not a buying one.
As of this writing, Tyler Craig didn’t hold a position in any of the aforementioned securities. Want insightful education on how to trade? Check out his trading blog, Tales of a Technician.