Oilfield services firm Halliburton (HAL) got a new fundamental supporter Thursday on a "buy" rating from Benchmark. The company gave a $50 price target for HAL but the charts and technical indicators suggest a different path is possible in the weeks ahead.
In this daily bar chart of HAL, below, I see that prices have so far been rejected from the $42-$44 area. This happened in April and June last year and tells us that there is some selling resistance in this area. Prices are pulling back but are still above the rising 50-day moving average line and the rising 200-day line.
The On-Balance-Volume (OBV) line shows strength from late September but it has been stalled in November and January so far. Prices have made a higher high from November to January but the OBV line has not matched that move up and is a bearish divergence.
The Moving Average Convergence Divergence (MACD) oscillator made a much lower high in January versus November and tells me that the trend strength is weakening and that does not bode well for price gains.
In this weekly Japanese candlestick chart of HAL, below, I see a potential double top formation with a high in June and another one recently. Prices are trading above the 40-week moving average line but that line appears to be cresting.
The OBV line shows a high in May and another high being established, I believe, now.
The weekly MACD oscillator is making a much lower high now versus last year even though prices are at an equal high. This is another bearish divergence.
In this daily Point and Figure chart of HAL, below, I can see a potential upside price target in the $49 area. At some point in time if HAL continues to weaken it will turn the chart bearish.
In this weekly Point and Figure chart of HAL, below, a price target of $63 is projected. A trade at $44 is needed to refresh the uptrend.
Bottom line strategy: The energy sector has been a bright spot in the stock market for the past year or so but the charts of HAL are showing some bearish divergences and that could foreshadow price weakness ahead. Traders who are long HAL should either nail down some profits and/or raise sell stops.
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