Thanks to a 20% drop in crude oil, and a big decline in demand and Brent Crude (in Europe), oil service names have been hit rather hard. The key here is finding out if there is further downside, and the chart below certainly looks like we have not hit bottom yet.
Given the sharp declines over the past few weeks in oil services stocks, the 200 week moving average seemed to be an area that will hold (though that was not the case during the last couple of weeks as prices fell hard on very heavy turnover). Relative strength has reached low levels not seen in years. Momentum indicators are in sharp decline, and price support does not come in until the 38 area, about 10% lower than where it is now.
For options trades, we picked up some puts in Halliburton (HAL) and Schlumberger (SLB), took some big profits on October 13, and rolled them down. I would consider buying more puts on a pullback (crude looks like it may head toward 75 WTI a barrel).
