We are not taking any action today. Since the market is basically flat again today awaiting direction from the Fed, we are going to focus on one of our core holdings- Schlumberger (SLB). First of all, it is showing a nice setup. (Look at the chart below). But what are the reasons behind its recent rally despite the “slowing growth” negativity. Crude oil is seeing some weakness in the U.S. and Europe, but the rest of the world still has a voracious appetite for the rare resource. It is still, by far, the most economical energy source in the world and oil rig counts continue to rise as a result. So, upstream drillers like SLB RIG and HAL are benefitting with record profits. Downstream companies like refiners (VLO and TSO) are also reaping rewards due to cheaper domestic oil prices and seemingly everlasting low natural gas input costs- both of which are contributing to higher margins and revenues. Someone commented on the site yesterday about STO (refiner). Great pick. Here is the breakdown on SLB:
Schlumberger (SLB) 6 Month Chart: Near 3 year lows, just broke above all major moving averages, showing a golden cross of the 20 over the 50 (orange line over green), and reported a solid quarter last week.