National Oilwell Varco, Inc. is a provider of equipment and components used in oil & gas drilling and production operations, oilfield services and supply chain integration services to the upstream oil & gas industry. It operates in three business segments: Rig Technology, Petroleum Services & Supplies and Distribution Services. The Rig Technology segment designs, manufactures, sells and services systems for the drilling, completion and servicing of oil and gas wells. The Petroleum Services & Supplies segment provides consumable goods and services used to drill, complete, remediate and workover oil and gas wells, service pipelines, flowlines and other oilfield tubular goods. The Distribution Services segment provides maintenance, repair and operating supplies, and spare parts to drill site and production locations worldwide.
To analyze National Oilwell Varco’s stock for potential trading opportunities, please take a look at the 1-year chart of NOV (National Oilwell Varco, Inc) below with my added notations:
Over the last month, NOV has formed a strong support level at $60 (green). You can also see how the $60 price is not a new level of importance to NOV. The current resistance for NOV would appear to be $70 (red). Lastly, $65 has been an area of support and resistance off and on throughout the year (navy). Not surprisingly, that same $65 level is where the stock is currently finding support. Regardless of your overall posture on the stock market, NOV provides you with multiple trading opportunities.
The Tale of the Tape: NOV is not only trading within the range of two important price levels at $60 and $70, but the stock also has a common level at $65. If you are bullish on the market or NOV, long trades could be made if the stock breaks through the $70 resistance or pulls back to the $65 support with a stop placed below the level of entry. Short plays could be made on a rise to $70 or on a break below $65 with a stop placed above whichever level is entered.
In addition, if NOV were to break below $65, the next level down for a long trade would be at $60. A break of the $60 support would provide another opportunity to short the stock.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT