Sector Scorecard: 3 Oil Stocks Sliding Toward New Lows

The past year has been rocky for crude oil, and the historic Iran nuclear deal has only heightened concerns of a supply glut. Since peaking near $58 around this time last year, the Market Vectors Oil Services ETF (OIH) has shed roughly 45% of its value to sit at $31.93 -- dangerously close to a five-year low of $31.51, tagged in mid-March. What's more, with oil lingering near three-month lows around the half-century mark, oil-related stocks are among the lowest-ranked on our sector scorecard. Against this backdrop, we thought we'd take a look at a trio of OIH components: National-Oilwell Varco, Inc. (NYSE:NOV), Seadrill Ltd (NYSE:SDRL), and Transocean LTD (NYSE:RIG).

But first, let's discuss the aforementioned Expectational Analysis® (EA) report card, which measures a sector's technicals against Wall Street sentiment. Those at the bottom of the list -- tallied by Schaeffer's Senior Quantitative Analyst Rocky White -- have a bearish EA set-up, as it seems expectations remain high, leaving plenty of room for bulls to abandon ship and exacerbate losses. Of the 38 sectors we track, "Oil" stands at No. 35.

Just 12% of the stocks under our oil umbrella are sitting north of their 80-day moving averages, and the average 52-week loss is almost 41%. Still, just over half of analysts maintain "buy" or better ratings. So, does sentiment line up for NOV, SDRL, and RIG?

Digging in, NOV was last seen 2.1% lower at $42.58, and just off a four-year low of $42.43. Pressuring the shares into the red are crude oil prices, as well as a downgrade to "sell" and a price-target cut to $35 from $50 -- territory not charted in almost five years -- at UBS.  From a longer-term perspective, NOV has moved steadily lower since peaking north of $86.50 in early September, with its 10-week and 20-week trendlines capping rebound attempts.

However, NOV is one of the oil stocks where it seems sentiment aligns with its fundamental and technical struggles. Short interest edged 4.1% higher during the most recent reporting period, and 17 of 26 analysts offer up "hold" or worse ratings.

Almost the same thing can be said for SDRL. The stock was last seen 5.7% lower at $9.11, and is within a point of its own four-year low of $8.58, touched in mid-March. As with most of its peers, the security has suffered tremendously over the past year, with rally attempts stalling in the $15 neighborhood. What's more, SDRL isn't expecting the global rig market to improve anytime soon.

Considering Seadrill Ltd has underperformed the broader S&P 500 Index (SPX) by roughly 25 percentage points during the past two months, it isn't shocking to discover that five of eight analysts consider the stock a "hold" or "strong sell." Or that short-term option traders are more put-heavy than usual, per the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.60 -- in the 87th percentile of its annual range.

Finally, RIG has suffered a similar fate, surrendering more than two-thirds of its value during the past year. The equity's attempt at a comeback in May were halted by its 10-month moving average and round-number resistance at $20. Today, the shares are down 4.5% at $13.94, toying with their record low of $13.28 touched on March 16.

Still, the stock's average 12-month price target sits at $20.28 -- a premium of 45% to RIG's current price. A round of price-target cuts could exacerbate selling pressure on the shares. And if analysts don't downwardly revise their expectations, these price targets could reinforce resistance in the $20 region, should the stock stage a coup.

Meanwhile, RIG's SOIR of 1.48 stands higher than just 9% of all other readings from the past year, suggesting short-term option players are more call-heavy than usual right now. Peak call open interest in the soon-to-be front-month August series sits at the out-of-the-money 18 strike, with more than 15,500 contracts outstanding. But, considering short interest accounts for more than a quarter of Transocean LTD's float, it's possible that some of those calls were initiated by shorts looking for a hedge.