Oil was hit hard and looks to continue downward. How does this effect the price of Schlumberger (SLB)? As oil demand increases, oil service equipment becomes more valuable. It takes a certain amount of time to build oil service equipment. There is always a lag time between the building of the equipment and the equipment coming on line, as well as getting people to operate the equipment. Oil service workers and equipment come at a premium. That's why as oil prices increase the price of oil service stocks like SLB and HAL appreciate faster then oil stocks like COP, XOM, and BP. Therefore, it stands to reason, as oil prices decrease the oil service stocks will be hit harder then oil companies.

What do the technicals say? From a technical point of view, SLB has just completed a very bearish MACD crossover, as well as having high RSI. The charts are even more convincing. SLB has recently broke 100 and has held quite well above it, but right now SLB looks to be creating a descending triangle at 100. This indicates SLB will break through support and see heavy downside pressure.



Andy Swan is co-founder and head trader for DaytradeTeam.com. To get all of Andy's day trading, swing trading, and options trading alerts in real time, subscribe to a one-week, all-inclusive trial membership to DaytradeTeam by clicking here.