Oil Services Stocks Plunge As Crude Oil Slips Into Bear Market Territory

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Includes: DO, MDR, NE, RIG
by: Richard Suttmeier
Summary

Nymex crude oil futures may be in a bear market territory, but they're above their "reversion to the mean" at $52.16 per barrel.

Diamond Offshore Drilling failed at its "reversion to the mean" on Oct. 9.

McDermott International failed to hold its "reversion to the mean" on Oct. 12.

Noble Corp. is attempting to hold its quarterly value level at $4.54 and remains below its "reversion to the mean".

Transocean has been below its "reversion to the mean" for the last three weeks.

Nymex crude oil futures set their 2018 high of $76.90 on Oct. 3, and then plunged by a bear market percentage of 21.1% to their close of $60.64 on Nov. 8.

Oil services stocks Diamond Offshore Drilling, Inc. (NYSE:DO), McDermott International Inc (NYSE:MDR), Noble Corporation Plc (NYSE:NE) and Transocean Ltd. (NYSE:RIG) are down significantly more with bear market loses of 34.7%, 64.6%, 35.6% and 26.8%, respectively.

A Scorecard For Crude Oil And Four Oil Services Stocks

Scorecard For Oil Services Stocks

The Weekly Chart For Crude Oil Futures

Weekly Chart For Crude Oil

Courtesy of MetaStock Xenith

The weekly chart for crude oil is negative with WTI below its five-week modified moving average of $66.84 but is still above its 200-week simple moving average or "reversion to the mean" at $52.16. The 12x3x3 weekly slow stochastic reading is projected to fall to 32.67 this week, down from 42.68 on Nov. 2.

My trading strategy is to buy weakness to the 200-week simple moving average of $52.16 and to sell strength to my quarterly and monthly risky levels of $73.87 and $75.58, respectively. My annual pivot of $63.81 remains a magnet through year end.

The Weekly Chart For Diamond Offshore Drilling

Weekly Chart For Diamond Offshore

Courtesy of MetaStock Xenith

The weekly chart for Diamond Offshore is negative with the stock below its five-week modified moving average of $16.54 and below its 200-week simple moving average or "reversion to the mean" at $19.66, which was last tested during the week of Oct. 12. The 12x3x3 weekly slow stochastic reading is projected to decline to 29.95 this week, down from 41.55 on Nov. 2.

My trading strategy is to reduce holdings on strength to my quarterly and monthly risky levels of $16.58 and $20.40, respectively.

Weekly Chart For McDermott International

Weekly Chart For McDermott

Courtesy of MetaStock Xenith

The weekly chart for McDermott is negative but oversold with the stock below its five-week modified moving average of $13.86 and below its 200-week simple moving average of $16.80 which failed to hold during the week of Oct. 12. The 12x3x3 weekly slow stochastic reading is projected to end this week at 14.38, below the oversold threshold of 20.00.

My trading strategy is to reduce holdings on strength to my annual and quarterly risky levels of $15.61 and $25.03, respectively. My semiannual and monthly pivots are $9.58 and $11.59, respectively.

Weekly Chart For Noble Corporation

Weekly Chart For Noble Corp

Courtesy of MetaStock Xenith

The weekly chart for Noble Corp. is negative with the stock below its five-week modified moving average of $5.67 and is well below its 200-week simple moving average or "reversion to the mean" of $8.11. The stock has been below its "reversion to the mean" since January 2014 when the average was $31.70. The 12x3x3 weekly slow stochastic reading is projected to fall to 35.18 this week, down from 50.59 on Nov. 2.

My trading strategy is to buy weakness to my quarterly value level of $4.54 and reduce holdings on strength to my monthly risky level of $7.07.

Weekly Chart For Transocean

Weekly Chart For Transocean

Courtesy of MetaStock Xenith

The weekly chart for Transocean is negative with the stock below its five-week modified moving average of $11.77 and below its 200-week simple moving average or "reversion to the mean" at $12.16 last tested during the week of Oct. 19. The 12x3x3 weekly slow stochastic reading is projected to decline to 36.94 this week, down from 47.49 on Nov. 2.

My trading strategy is to reduce holdings on strength to my quarterly and monthly risky levels of $13.36 and $15.18, respectively.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.