Stocks remain rather range bound in early afternoon trading as the major market averages move back and forth from unchanged levels. Oil service stocks lead sector gainers right now with the OSX.X trading up 3.6% to $74.89, but have yet to get above last weeks high of $76.14, which was traded on Thursday.
Oil Service Index (OSX.X) - last 10 months
While oil service stocks may be today's biggest sector gainer, there's a lot of work to be done before we can begin to think that his group is set for a new bullish phase. In late September, the OSX.X broke just below the October 1999 lows. In October of 1999, the OSX.X made an about face and eventually traded as high as $143.98 in September of 2000. A move above the $80 level for the OSX.X could have longer-term investors adding to positions.
It's been our observation in recent months that the oil service stocks act much better on word from OPEC of production INCREASES, not cuts. A stronger economic outlook has also had a tendency to boost share prices for stocks in this group. A break above the $80 level for the OSX.X could be a heads up for subscribers that the MARKET is beginning to think the economy is showing signs of strength.
For now, we'd be more comfortable with some "toe dipping" in the sector and stay with some of the bigger names like Schlumberger (NYSE:SLB) or Halliburton (NYSE:HAL).