Baker Hughes Incorporated (NYSE: BHI)

Baker Hughes Incorporated supplies oilfield services, products, technology, and systems to the oil and natural gas industry worldwide. It offers drilling and evaluation products and services, including drill bits for performance drilling, hole enlargement, and coring; conventional and rotary steerable systems used to drill wells; measurement-while-drilling and logging-while-drilling systems to perform reservoir navigation services; drilling optimization services; tools for coil tubing drilling and wellbore re-entry systems; coring drilling systems; surface logging; emulsion and water-based drilling fluids systems; and reservoir drill-in fluids, as well as fluids environmental services. The company’s drilling and evaluation products and services also comprise wire line services, such as tools for open hole and cased hole well logging to gather data to perform petro physical and geophysical analysis; reservoir evaluation coring; casing perforation; fluid characterization; production logging; well integrity testing; pipe recovery; and seismic and micro seismic services.

To review Baker’s stock, please take a look at the 1-year chart of BHI (Baker Hughes Incorporated) below with my added notations:

1-year chart of BHI (Baker Hughes Incorporated)

Notice the rising wedge I have outlined on the chart of BHI. A rising wedge price pattern is essentially a type of triangle formation in which the stock (BHI) has formed an up trending resistance line (red) and an up-trending support level (green). These two trend lines converging on one another combine to form a rising wedge, which is usually a terminal pattern. Confirmation of this pattern would occur if the stock broke the up-trending support.

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The Tale of the Tape: BHI has created a rising wedge pattern, which should lead to a break lower. A short trade could be entered on a break out of the bottom of the wedge, which currently sits near $47.50. If a trader believes the stock has higher prices in it’s future, a long play could be made at that support with a stop placed below that level.

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

Follow me on Twitter: @cmtstockcoach