This column is part of chartist Bruce Kamich's series on his Top 5 Stocks in the S&P 500.
4. Helmerich & Payne (HP)
Helmerich & Payne is the fourth of five names in the S&P 500 that I like on the charts and indicators.
Shares of HP suffered a sizable decline over the past two years, but the stock began a bottoming process this past August, and looks attractive again. Let's take a look at the charts.
This daily chart of HP, above, gives us an "evolution of a bottom" picture. Prices made a low in August and a lower low in September, but the momentum study in the bottom panel made a higher low in the same time period.
This is what chartists call a bullish divergence: Prices are going down, but the pace of the decline slows, which is often seen as a stock bottoms. HP rallied, and the 50-day moving average turned sideways. Unfortunately HP then went on to make a lower lower in January of this year.
Prices rallied again, but are now pulling back to a flat, 200-day moving average line. The On-Balance-Volume (OBV) line has moved up from a February low, telling us that some buyers have become more aggressive.
In this three-year weekly chart of HP, above, we can see the 2/3 retracement to $40 from around $120. The declining, 40-week moving average defined the downtrend until this year, when HP rallied above it. The slope of the 40-week average line is now flat. The weekly OBV line has been improving in fits and starts, while the Moving Average Convergence Divergence oscillator is back up to the zero line, telling us that the trend has improved.
Strategy: Traders and investors could use the current pullback in HP to do some initial buying. The chart would not look as attractive if we saw a close below $50, so that is the risk point for me. Additional buying can be done on a close above $65, adding to a winning position.
Bruce Kamich's Top 5 Stocks in the S&P 500: