Nymex crude oil futures traded to a fresh 2016 high of $52.42 per barrel on Dec. 5. McDermott (MDR) remains the biggest winner, up 130% year to date versus 37.2% for oil.
This does not mean all five stocks are out of the woods. Their technical charts show Diamond Offshore, Noble and Tidewater are in bear market territory versus their 2016 highs.
Here’s the scorecard for crude oil and the five oil-services stocks.
The weekly charts show a red line through the price bars, which is the key weekly moving average (a five-week modified moving average). The green line is the 200-week simple moving average considered the “reversion to the mean.”
The study in red along the bottom of the chart is weekly momentum (a 12x3x3 weekly slow stochastic), which scales between 00.00 and 100.00, where readings above 80.00 indicates overbought and readings below 20.00 indicates oversold.
A negative weekly chart shows the stock below its key weekly moving average with weekly momentum declining below 80.00 in a trend towards 20.00. A positive weekly chart shows the stock above its key weekly moving average with weekly momentum rising above 20.00 in a trend towards 80.00.
Here’s the weekly chart for Diamond Offshore.
Courtesy of MetaStock Xenith
Diamond Offshore trades around $19, down 8.2% year to date and in bear market territory 27.5% below its June 8 high of $26.72. The stock is also in bull market territory 36.6% above its Jan. 20 low of $14.18.
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The weekly chart is positive with the stock above its key weekly moving average of $17.69 and well below its 200-week simple moving average of $38.77. The weekly momentum reading is projected to rise to 53.83 this week up from 41.94 on Dec. 2.
Investors looking to buy weakness should do so at $17.28, which is a key level on technical charts until the end of next week. Investors looking to reduce holdings should consider doing so on strength to $19.56 and $22.10, which are key level on technical charts until the end of December.
Here’s the weekly chart for McDermott.
Courtesy of MetaStock Xenith
McDermott trades at close to $8, up 130.4% year to date and set a fresh 2016 high of $7.73 on Dec. 8. The stock is in bull market territory 250.9% above its Jan. 20 low of $2.20. McDermott was a buy as an “option on survival,” which is a stock trading between $1 and $3 a share.
The weekly chart is positive but overbought with the stock above its key weekly moving average of $6.25 and above its 200-week simple moving average of $6.04, which was the target as the “reversion to the mean” one month ago, on Nov. 2. The weekly momentum reading is projected to rise to 91.02 this week up from 88.54 on Dec. 2, rising further above the overbought threshold of 80.00.
Investors looking to buy McDermott should consider doing so on weakness to $6.70, which is a key level on technical charts until the end of December. Investors looking to reduce holdings should consider selling strength to $9.36, which is a key level on technical charts going back to the high set during the week of Jan. 24, 2014.