Oil Service Sector stocks showing extreme risk, poor fundamental ratings
Most of the big oil services companies have reported earnings already for the third quarter. The sector has been trending higher over the last month as those earnings reports have been released, but many of the stocks are now in overbought territory based on their daily stochastic readings. On November 7, four of top six holdings in the VanEck Vectors Oil Services ETF (NYSE: OIH) appeared on a bearish scan that I run each night. One of the factors in the scan is a bearish crossover from the stochastics and that the readings are at or near overbought territory.
We see on the daily chart of the OIH that was in overbought territory before the indicators turned lower in the past week.
The four holdings of the OIH that appeared on my bearish scan were Halliburton (NYSE: HAL), Helmerich & Payne (NYSE: HP), National Oilwell Varco (NYSE: NOV), and Schlumberger (NYSE: SLB). I took those four stocks and ran them through Tickeron’s Screener in order to see how the companies were doing on a fundamental basis. The results were not good. We see in the table below that all four get Profit vs. Risk rating scores of 100 and that is the worst possible score a stock can get. The SMR ratings from Tickeron are all in bottom 10% of ratings. Halliburton and Helmerich & Payne both have Price/Growth ratings in the bottom 20% while Schlumberger’s rating is in the bottom quartile of readings.
The only ratings that are positive are the Valuation ratings for Helmerich & Payne, Halliburton, and Schlumberger. The highest rating in any category for all of the ratings is the P/E Growth rating for Helmerich & Payne.
I also ran the stocks through Investor’s Business Daily’s ratings system and what came out was more of the same—lots of poor readings and only one really positive reading. The lone rating in the top quartile was Helmerich & Payne’s EPS rating at 76. The SMR ratings for Halliburton and Helmerich & Payne are average. All of the other readings are below average with many of them being in the bottom 20% – those are designated with the red highlights.
The one category from IBD that isn’t a fundamental indicator is the Relative Price Strength rating. We see that Halliburton and Helmerich & Payne both rank in the bottom 20% in this category which measures the stock’s price performance against all other stocks for the past year. National Oilwell Varco and Schlumberger fare a little better, but they are both still in the bottom quartile in terms of price performance.
To complete the analysis process that I use, I looked at the sentiment indicators for all four of the stocks. What I found was that despite the poor fundamentals and the downward trends in the stocks, there were still a few extremely optimistic sentiment indicators.
Halliburton’s buy percentage is at 86.2% with 25 of 29 analysts rating the stock as a “buy”. Schlumberger’s buy percentage is in the average range while National Oilwell Varco and Helmerich & Payne show a little bit of pessimism toward the stock with buy percentages that are below average. Remember we view sentiment from a contrarian viewpoint so seeing below average readings is a positive sign for the stock.
As for the short interest ratios for these four companies, Schlumberger’s is low at 1.9 and that is a concern. Halliburton’s ratio is in the average range and Helmerich & Payne and National Oilwell Varco have short interest ratios that are slightly higher than average. Again that is a positive sign that the ratios are above average.
Overall, the oil service sector looks like a pretty risky bet at this point in time. Of these four stocks, only National Oilwell Varco hasn’t reported earnings yet, so I wouldn’t look to earnings as a catalyst that helps improve the fundamental picture.
Momentum Indicator for OIH turns positive, indicating new upward trend
OIH saw its Momentum Indicator move above the 0 level on March 17, 2025. This is an indication that the stock could be shifting in to a new upward move. Traders may want to consider buying the stock or buying call options. Tickeron's A.I.dvisor looked at 78 similar instances where the indicator turned positive. In of the 78 cases, the stock moved higher in the following days. The odds of a move higher are at .
Technical Analysis (Indicators)
Bullish Trend Analysis
The RSI Oscillator points to a transition from a downward trend to an upward trend -- in cases where OIH's RSI Indicator exited the oversold zone, of 25 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
The Moving Average Convergence Divergence (MACD) for OIH just turned positive on March 17, 2025. Looking at past instances where OIH's MACD turned positive, the stock continued to rise in of 39 cases over the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where OIH advanced for three days, in of 328 cases, the price rose further within the following month. The odds of a continued upward trend are .
OIH may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
Bearish Trend Analysis
The Stochastic Oscillator may be shifting from an upward trend to a downward trend. In of 59 cases where OIH's Stochastic Oscillator exited the overbought zone, the price fell further within the following month. The odds of a continued downward trend are .
The 10-day moving average for OIH crossed bearishly below the 50-day moving average on February 25, 2025. This indicates that the trend has shifted lower and could be considered a sell signal. In of 19 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where OIH declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
The Aroon Indicator for OIH entered a downward trend on March 13, 2025. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
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