Oil Services

Scott Maragioglio (212-692-6392) smaragio@epiphanyresearch.com

We're seeing an aggressive opportunity in the oil services sector right here. This energy sector  has made some significant improvements in the last month. The broader group has broken out of a large bullish rectangle to the upside and breadth for the sector has broken out to new highs. This is bullish for the broader group.
The oil services sub-sector is the most volatile component of the energy sector. The oil service stocks formed very bearish looking distribution patterns over the last year. Traders get defensive on this sector as they anticipated the end of the energy bull market and a breakdown in crude oil. What we have seen instead is a resurgence in these names that is starting to nullify the bearish chart formations in the sector. When a bearish pattern fails it can be a very bullish situation as traders positioned for a decline on the short side are forced to cover and take the stocks higher. This is an aggressive trade right here, but it's an interesting opportunity.