Schlumberger (SLB) is bouncing up today after swinging to a large Q1 net loss and cutting its dividend sharply. Maybe this is another example of selling the rumor and buying the news so let's check out the charts and indicators.
In this daily bar chart of SLB, below, we can see some slight improvement in the technical indicators. Some buying support for SLB has developed below $15.
The daily On-Balance-Volume (OBV) line has been stable from the early part of March. The Moving Average Convergence Divergence (MACD) oscillator crossed to the upside last month for a cover shorts buy signal and continues to move up towards the zero line.
In this weekly bar chart of SLB, below, we can see a long-term downtrend for SLB. The problems go back a while. Prices are below the declining 40-week moving average line. The weekly OBV line has been declining for a long time and the MACD oscillator is barely narrowing.
In this Point and Figure chart of SLB, below, we can see that prices have improved enough to generate an initial upside price target in the $19-$20 area.
Bottom line strategy: The markets are discounting mechanisms and price lows are typically made before the news turns positive. SLB is acting like a discounting mechanism. Near-term we could rally to the $20 area but longer-term we will be lucky to see many months of basing action.
