Parker Drilling Company (NYSE: PKD)

Parker Drilling Company, together with its subsidiaries, provides contract drilling and drilling-related services in the United States, Latin America, Africa, the Middle East, the Asia Pacific, and Commonwealth of Independent States. It operates in six segments: Rental Tools, U.S. Barge Drilling, U.S. Drilling, International Drilling, Technical Services, and Construction Contract. The company operates barge rigs for drilling natural gas, oil, and a combination of oil and natural gas in the shallow waters in and along the inland waterways, as well as drills geologically difficult wells and manages the logistical and technological challenges of operating in remote, harsh, and ecologically sensitive areas. As of February 28, 2013, its rig fleet included 23 land rigs and 2 offshore barge rigs in international locations; 12 barge rigs in the U.S. Gulf of Mexico; and 2 land rigs in the U.S. The company also provides rental tools for land and offshore oil and natural gas drilling and offers equipment used for drilling, workover, and production applications, such as drill pipes, heavy-weight drill pipes, tubing, high-torque connections, blow-out preventers, drill collars, and others. In addition, the company also provides technical services.

To review Parker’s stock, please take a look at the 1-year chart of PKD (Parker Drilling Company) below with my added notations:

1-year chart of PKD (Parker Drilling Company)

PKD had been trading sideways for the last 3 months. Over that period of time, the stock had formed a clear resistance level at $8.50 (red). In addition, the stock also created a strong level of support at $7.50 (blue). The rectangle formation on PKD is very helpful in trading it because at some point the stock would have to break one of the two levels that the pattern had created. As you can see, earlier this week the stock finally broke the $7.50 support and has already started moving lower.

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The Tale of the Tape: PKD recently broke down out of its rectangle pattern. A rally up to $7.50 would provide an opportunity to get short on the stock. However, a break back above $7.50 would negate the forecast for a move lower.

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