Schlumberger Is Finally Showing Some Positives

 | Sep 12, 2017 | 3:32 PM EDT
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Schlumberger Ltd. (SLB) is starting to possibly build a base pattern. It has been a long time coming but we are seeing some positive developments. Inch by inch, step by step.

In this daily bar chart of SLB, below, we can see that SLB has not made a lower low for a week or so. Prices have actually rallied to close above the declining 50-day moving average line. You have to look closely but it looks like the daily On-Balance-Volume (OBV) line is showing a slight upward trend. A rising OBV line tells us that buyers of SLB have become more aggressive with heavier volume being traded on days when SLB has closed higher. In the bottom panel the trend-following Moving Average Convergence Divergence (MACD) oscillator has crossed to the upside for a cover shorts buy signal.

In this weekly bar chart of SLB, below, we can see that prices are below the declining 40-week moving average line but the low from January 2016 has not been broken. The weekly OBV line has stabilized in the past month while the MACD oscillator on this time frame is close to a cover shorts buy signal.

Bottom line: A bottom is a process and not a point in time. As the process of a bottom in SLB rolls along we could see a slight new low for the shares, but I do not anticipate significantly lower prices at this juncture. Ideally I would like to see SLB trade sideways for several months.

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