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Oil Service stocks on the move

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The last couple of weeks we've been noting that the Oil Service Index (OSX.X) looked poised for a move higher. Today's trade at $86 for the index gives us a double top buy signal and now gives bullish traders an early longer-term bullish price objective to work with in the group.

I like to plot the OSX.X on a $2 box scale. Believe it or not, this index is rather volatile and can make for good trading. The $2 box scale helps remove some of the noise and helps give me a better understanding of just what is going on.

The bullish wedge we noticed on the bar chart last week and break above that wedge has been bullish the past several sessions. From the point and figure chart, we can see where a potential trade at $90 would be a spread-triple top buy signal.

Oil Service Index Chart - $2 box

A break above the $90 level might well set the stage for a bullish rally to the downward trend (bearish resistance). A stock I continue to like in the group based on its point and figure charts as well as its bar chart is shares of BJ Services (NYSE:BJS).

Jeff Bailey
Senior Market Technician
Option Investor

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