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Wednesday, March 30, 2005

Halliburton poised

News - Hoover's Online:


Engineering, construction, and oilfield service giant, Halliburton (NYSE:HAL), has found its way onto our intraday unusual option activity list, thanks to heavy trading of its April 45 call (HAL DI). This onslaught of optimism has helped move HAL's Schaeffer's put/call open interest ratio (SOIR) to 0.55, higher than 65 percent of the readings taken over the past 52 weeks. Further optimism can be seen in the short interest action toward the oil giant as it decreased by one percent over the past month. While this is a minute decrease, the action still indicates that bears are vacating their pessimistic positions.

While sentiment on the Street reflects mild optimism, analysts are a bit more emphatic in their love for Dick Cheney's favorite company. According to Zacks, 15 of the 16 analysts covering HAL bestow a 'buy' rating on the company. Of those 15 HAL hounds, 13 of them rate the firm a 'strong buy.' The lone dissenting voice in the wilderness issues an extremely pessimistic 'strong sell' ranking on the oil outfit. This allows for a sizeable shift to the negative should the analysts' love for HAL wane.

Why all the love for HAL? Taking a quick glance at the company's charts, one can see that it has in fact been a strong performer. On its daily chart, we see that HAL has been kicked sideways between the 40 and 44 levels since January. Currently, the stock is dropping toward the support of the 40 level. While it is difficult to determine when HAL will break out of this trading range, HAL's 10-day moving average is poised to make a bullish cross of its 20-day moving average. A move of this sort is often times a technical harbinger of a rally. Next we turn to a weekly chart for HAL. In August 2004, HAL moved above its two weekly trendlines and has since used their double-barreled support to ascend to a near-term high of 45.29. The 45 region is the only hurdle that HAL has struggled to overcome. The dual support of these weekly trendlines has allowed HAL to mark a meteoric rise since July 2002, a rise of more than 300 percent. This rise is mirrored on HAL's monthly chart, the prettiest of the three charts. The one time the firm has fallen below the support of its 10-month trendline it was quickly ushered higher by its 20-month trendline. All is not rosy for HAL, as it is experiencing resistance at the 45 region. Can the support of all these trendlines help the oil concern break through this resistance? Any negative news definitely allows for the glut of optimistic analysts to change their minds and shift the stock's price lower. If bad news does roll down the pipe for HAL, there will be little support in the form of a short-covering rally as it would take slightly more than one day for bears to cover their pessimistic bets against the firm.

Click on the following link to see the Monthly Chart of HAL since December 2001 with 10-Month and 20- Month Moving Averages: http://www.schaeffersresearch.com/wire?ID=12836&obspage=2 .

1 comment:

trading knowledge said...

An interesting read...


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