SLB Schlumberger Analysis April 2016 (W,M,Q)
Created on Tuesday, 05 April 2016 01:22
Written by Austin Galt
Schlumberger NV (SLB) is a supplier of technology, integrated project management and information solutions to the oil and gas industry. It is listed on the New York Stock Exchange (NYSE) with a market capitalisation of just over $90 billion. Price last traded at $72.64.
Let’s take a top down approach to the analysis beginning with the quarterly chart.
SLB QUARTERLY CHART
We can see the overall trend is bullish with a pattern of higher highs and higher lows. Price has retreated off the previous higher high set in 2014 at $118.76 and we now await the next higher low.
The Bollinger Bands show price found resistance at the upper band in 2014 and then traded down to the middle band where some temporary support came in. That support eventually gave way and price now looks to be trying to get to the lower band. It has already gone close but perhaps price will give it one last shot.
I have drawn a Fibonacci Fan from the 2002 low to 2014 high. This shows the recent low at support from the 61.8% angle while price is now back at the 50% angle where some resistance may come in and send price back down to give the 61.8% a bit more of a test.
I have added Fibonacci retracement levels of the move up from 2002 low to 2014 high and price has so far breached the 50% level and the next support level is the 61.8% level at $55.69.
The horizontal line denotes the 2011 low at $54.79 which represents support and this could well be where price is headed in order to really test this support.
The RSI shows a triple bearish divergence at the 2014 price high. This often leads to a significant move down and that has certainly been the case here. However, I suspect this move down is nearly finished and price is set to head back up and make new highs which may well set up a quadruple bearish divergence in the years to come.
The MACD indicator is still bearish although the averages do appear to be coming back together.
SLB MONTHLY CHART
The Bollinger Bands show the recent low down at the lower band however price has so far been unable to recapture the middle band so perhaps another test of the lower band is still in front of us.
I have added Fibonacci retracement levels of the move up from February 2009 low to July 2014 high. Price has already surpassed the 61.8% level and the next level is the 76.4% level at $54.81 and I suspect that is where the final low will come in.
The horizontal line denotes the October 2011 low which is right around the 76.4% level so that really is some solid support down there.
The bearish Fibonacci Fan drawn from the October 2007 high shows some nice price symmetry. The October 2011 low was at support from the 76.4% angle. Price then overcame the 88.6% angle and went on to make an all time high in July 2014 and now looks to be coming back down to test the angle which now represents support.
The bullish Fibonacci Fan drawn from the February 2009 low shows the October 2011 low at support from the 76.4% angle while the July 2014 high was at resistance from the 50% angle. The recent low was at support from the 88.6% angle and I expect price to move back down to give this angle another test. This may result in a higher low or marginally lower low. Personally, I favour the latter.
The RSI already shows a bullish divergence while a new price low would likely set up a nice triple bullish divergence.
The MACD indicator is marginally bullish.
Let’s finish the analysis with the weekly chart.
SLB WEEKLY CHART
There is a pattern of lower lows (LL) and lower highs (LH) which looks unbroken so the downtrend should continue.
The latest lower high was right at resistance from the January 2015 low denoted by the horizontal line. Old lows often represent resistance in the future and here is one example of that.
The Bollinger Bands show price seemingly finding resistance at the upper band and I favour price to now head back to the lower band.
The Fibonacci Fan shows the recent downtrend generally taking place between the 61.8% and 76.4% angles. Price seems to be gaining some strength in being able to marginally overcome the 76.4% angle. Perhaps it will overcome the angle once and for all after the next low.
I have added moving averages with time periods of 100 (red) and 200 (black) and these are in bullish formation with the red line above the black line. So, perhaps after one more low the overall bull trend will kick back into gear.
Summing up, price looks headed back down to test the recent low and after a higher low or marginally lower low, price should turn back up impulsively as the overall bull trend reasserts control.
Disclosure – I have no financial interest in SLB.