RPC, Inc. provides a range of oilfield services and equipment for oil and gas companies involved in the exploration, production, and development of oil and gas properties in the United States, Africa, Canada, China, Eastern Europe, Latin America, the Middle East, and New Zealand. The Technical Services segment offers pressure pumping, coiled tubing, snubbing, nitrogen pumping, well control consulting and firefighting, down hole tools, wire line, fishing, and fluid pumping services that are used in the completion, production, and maintenance of oil and gas wells. The Support Services segment provides a range of rental tools, including blowout preventers, high pressure manifolds and valves, Hevi-wate drill pipes, tubing products, production related rental tools, pumps, diverters, drill pipes, drill collars, handling tools, and hoses that are used for onshore and offshore oil and gas well drilling, completion, and work over activities.
Take a look at the 1-year chart of RPC (NYSE: RES) below with my added notations:
Over the last 4 months RES formed an inverse head and shoulders pattern (green). I have noted the head (H) and the shoulders (s) to make the pattern more visible. The stock’s neckline resistance was at the $14 level (blue). RES confirmed its H&S by breaking through the neckline earlier this week.
Keep in mind that simple is usually better. Had the inverse H&S pattern never been pointed out, one would still think RES was moving higher simply because it broke through its $14 resistance level.
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The Tale of the Tape: RES confirmed an inverse head & shoulders pattern. A long trade could be entered on a pull back down to the $14 level. A break back below $14 could negate the forecast for a higher move.
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
Follow me on Twitter: @cmtstockcoach