The price of Parker Drilling (PKD) has come way down from its 2007 zenith, but a low price doesn't make a chart attractive as a buy. Let's look closer.
Looking at this chart, above, we can see that prices have dropped to around $1 from $4.50. PKD might be considered "cheap" at just $1, but the word "cheap" is not part of a technician's vocabulary. Technicians like to talk about trends and oversold and overbought. Cheap and expensive and undervalued and overvalued are not terms that chartists embrace. What we can say is that PKD is still in a downtrend, but the On-Balance-Volume (OBV) line has turned flat in the past two months, suggesting that selling pressure has abated. A rising OBV line would be more encouraging.
As prices weakened in December, January and February, the momentum study in the lower panel made higher lows. This bullish divergence (prices down and momentum improving) is a start on the way toward a possible bottom. A lot more work needs to be done. Buying a lot of shares of a $1 stock might seem tempting on some level if we dream of a subsequent big rally, but bases take time and that means we will have plenty of time to get on board. Patience.
This long-term chart of PKD, above, should speak to the point of patience. In the past two years, PKD has come down from $8 and the OBV line has matched that two-year slide. Prices are below their 2009 white-knuckled nadir, so a quick turnaround may be the last thing on our mind. Keep your powder dry is the old saying.