NEW BEARISH Plays
FMC Technologies - FTI - close: 31.61 change: -1.02
Stop Loss: 33.15
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on August -- at $---.--
Listed on August 19, 2015
Time Frame: Exit PRIOR to earnings on October 20th
Average Daily Volume = 3.1 million
New Positions: Yes, see below
The sell-off in energy stocks is heating up again. We are hearing more and more analysts calls for crude oil to fall into the low $30s. Today WTI crude oil closed at $40.66 a barrel. That's after a more than -55% drop from its 2014 highs.
FTI is in the basic materials sector. They're part of the oil services industry and stocks in this group tend to be more volatile than the larger integrated oil names. According to the company,
"FMC Technologies, Inc. (FTI) is the global market leader in subsea systems and a leading provider of technologies and services to the oil and gas industry. We help our customers overcome their most difficult challenges, such as improving shale and subsea infrastructures and operations to reduce cost, maintain uptime, and maximize oil and gas recovery."
Like most oil-related businesses FTI has seen its revenues decline as oil companies cut back. FTI reported its Q2 results on July 21st. Net income fell -52% with a profit of $0.52 a share. That was 9 cents worse than expected. Revenues were down -14.6% to $1.7 billion, which was relatively in-line with estimates.
Management said their land technologies business saw sales fall -29% and its energy infrastructure business retreat -32%. Their subsea business only fell -7%. However, FTI management announced they were cutting their workforce in the subsea business. Ocean floor drilling is really expensive and FTI probably sees fewer jobs in the near future as major oil companies cut their capex budgets.
Shares of FTI plunged -10% following its earnings report. Yet there was little follow through lower. FTI spent almost three and a half weeks consolidating sideways in the $32.00-34.00 range. That changed today. The oil-sector weakness today sparked a bearish breakdown in FTI that pushed the stock below its trading range.
We suspect that FTI has just launched into its next leg lower. If $30.00 does not hold as support the next support level could be $25 or $22. The point & figure chart is bearish and forecasting a long-term target of $20.00.
Today's low was $31.45. I'm suggesting a trigger to open bearish positions at $31.30.
Trigger @ $31.30
- Suggested Positions -
Short FTI @ $31.30
- (or for more adventurous traders, try this option) -
Buy the OCT $30 PUT (FTI151016P30) current ask $1.35
option price is a current quote and not a suggested entry price.
Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.
Option Format: symbol-year-month-day-call-strike