Weatherford International Ltd (NYSE: WFT)

Weatherford International Ltd. provides equipment and services used in the drilling, evaluation, completion, production, and intervention of oil and natural gas wells worldwide. It offers artificial lift systems, which include reciprocating rod lift systems, progressing cavity pumps, gas lift systems, hydraulic lift systems, plunger lift systems, hybrid lift systems, wellhead systems, and multiphase metering systems. The company also provides drilling services, including directional drilling, secure drilling services, well testing, drilling-with-casing and drilling-with-liner systems, and surface logging systems. In addition, it designs and manufactures drilling jars, under reamers, rotating control devices, and other pressure-control equipment used in drilling oil and natural gas wells; and offers a selection of in-house or third-party manufactured equipment for the drilling, completion, and work over of oil and natural gas wells for operators and drilling contractors, as well as a line of completion tools and sand screens. Further, the company provides wireline and evaluation services, as well as well abandonment and wellbore cleaning services; stimulation and chemicals, including fracturing and coiled tubing technologies, cement services, chemical systems, and drilling fluids.

To review Weatherford’s stock, please take a look at the 1-year chart of WFT (Weatherford International Ltd.) below with my added notations:

1-year chart of WFT (Weatherford International Ltd.)

WFT had been trading within a sideways Rectangle for the last (3) months. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern. What’s great about a Rectangle pattern is that it not only provides you with trading points of support & resistance, but it also gives clearly defined breakout & breakdown points. The Rectangle pattern on WFT formed a $13 resistance (blue), which was also previous support, and an $11.50 support (lt. blue). Late last week the stock broke through the resistance.

The Tale of the Tape: WFT formed a very common chart pattern know as a Rectangle and last week the stock broke through resistance. A long trade could be made on a pullback to the $13 support. A break back below $13 would provide an entry for a short trade.

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!

Good luck!

Christian Tharp, CMT