Drillers Are No Longer Trading Together

The leading energy drilling stocks have faced major headwinds since the BP plc BP oil leak in the Gulf of Mexico. It seems that most of the companies in the drilling sector have bounced since early June. However, since that period these stocks are now trading in their own world and no longer in tandem with each other. Schlumberger LTD SLB reported earnings this morning and missed on revenue. The stock is trading lower today by 1.62 to $59.72. The stock has made higher lows since putting in an early June bottom. Therefore, the chart is still signaling possibly more upside in the near term if the current trend holds. Schlumberger LTD will have important daily chart resistance around the $63.50 - $63.75 area. However, there will be minor daily chart resistance at the $62.00 level first. Halliburton Co HAL has been the best performing energy driller since early June when the stock was trading as low as $21.10. Today the stock is trading lower by 0.20 cents to $30.09. While Halliburton Co has had a tremendous rally over the past eight weeks the stock is starting to look a little tired and extended. Therefore, a pullback or some consolidation would be in order here around the current level. It is important to remember the stock has bounced around forty percent from it's June 1st low. Transocean LTD RIG is trading higher today by 0.17 cents to $46.81. This stock has faced major issues since the Gulf of Mexico oil leak and it still shows on the charts. While the stock is still trading off it's June 9th low it is still struggling to make new highs from that time. Should the stock break below the $45.75 pivot made on June 30th it would likely trade down to the June 9th low at $41.88. As for now the stock still has a chance to bounce as it has been declining since the July 13th pivot high at $55.00 and is slightly oversold. Normally, a sector will trade together as every stock in the group will mimic the other leading name. However, this sector has been disconnected since the Gulf of Mexico oil leak. Don't take it for granted that this sector will resume trading in tandem anytime soon. The charts are just not telling us that at this time. Nicholas Santiago Chief Market Strategist www.InTheMoneyStocks.com