Halliburton is one of the leading providers of drilling and production services for shale extraction efforts globally. The natural gas boom resulting from higher oil prices and wider use of shale drilling have resulted in U.S. production increasing 20% from 2005-2010. But more importantly prices have been falling dramatically from $7.30 /MCF to $4.16 /MCF during this time period. The risk remains that prices are too low for many shale operators to remain viable, which could pose downside risks for companies like Halliburton.
That said, I’m no value trader. I believe creating a objective valuation of a company is possible but incredibly difficult partially due to the vast amount of factors necessary to take into consideration. That’s why I’ve chosen to talk about a very simple cyclical trend I’ve noticed Halliburton following for the past 4 months. Check out the chart and see if you can spot it before I spoil it for you.
As you can clearly see, since February Halliburton has predictably cycled through a monthly peak and valley setup. Even more astonishingly, the pattern seems to peak around the start of every month. The SwamiCharts SwingWave indicator directly below the chart illustrates the valleys with blue and the peaks with orange. Also, the Swami Predict indicator gives buy signals on emerging green and sell signals on emerging red.
Lately, I’ve come to appreciate the individuality of stocks. Besides fundamentals, each chart seems to have it’s own personality. This is a great example of a stock that can be successfully analyzed separately from it’s fundamentals.