Commentary: oil service ETF nears 'double-top' trigger

Discussion in 'ETFs' started by arl, May 5, 2004.

  1. arl


    Commentary: oil service ETF nears 'double-top' trigger (OIH) By Tomi Kilgore

    NEW YORK (CBS.MW) -- The Merrill Lynch Oil Services Holdrs (OIH) , an exchange traded fund tracking the oil service sector, was shedding $2.58, or 3.7 percent, to a $68.04, with all 18 of its components losing ground. The OIH had hit a 1-month low of $67.50 earlier in the session after Banc of America downgraded the sector to "underweight" from "overweight," and recommended investors reduce their weightings rather than ride out a correction. A close below the March 24 low of $66.56 -- the low sandwiched between the March 2 high of $75.28 and the April 27 high of $74.20 -- would confirm a minor "double-top" technical reversal pattern in the sector tracking stock's chart. Support below that level should come in at the "gap" in the charts between the Jan. 16 high of $63.88 and the Jan. 20 low of $64.70, followed by Jan. 8 low of $61.18. Resistance sits at Tuesday's low of $69.78 (the top of the "gap" between Wednesday's high of $69.18), and then at the April 27 high.
  2. So much for $39.00 per barrel crude that causes the MAJORS to increase their capital spending budgets on drilling.
  3. Osman


    i wish this article had details on the volume during the double top, it would make it easier to see just how effective the formation would be.
  4. Catoosa


    News events determine the chart pattern. I use charts as news events and supply vs demand seam to drive prices of things back to their mean. Could be a good day to buy OIH.
  5. Former Daine Rauscher oil drilling analyst, Jim Wicklund now at BofA DOWNGRADED the entire group from "overweight" to "underweight".

    He sees a 5% sequential decline in the U.S. rig count in store for 2005 as "two-plus years of higher drilling, high commodity prices and higher services prices bring supply/demand closer into balance and margins for exploration and production efforts narrow."

    North American drilling activity drives stock prices. He sees commodity prices dropping over the next several quarters.

    "The stock price cycle began in September 2002, making this (upward trend in prices) a 31-month cycle, relative to historical averages of two plus or minus years," Wicklund said.{BB000A63-570E-4D98-9102-1ECD62276D5F}
  6. Seems like a perfect scenario right now for the whole oil patch. Crude at 13 year highs, rig counts up, daily rates up. From a fundamental perspective, it isn't likely to get any better and stock prices reflect perfection. I expect a broad decline in stocks like ESV, NE, RDC, and SII.
  7. Osman


    those are good points, my feelings are that the gas prices will still go up in the summer months so i'm staying in the sidelines.