BHGE Shares Blow Past Important Trendline with Earnings Win

Sector peer SLB is also testing a key trendline

Jul 31, 2019 at 1:08 PM
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Oilfield services provider Baker Hughes (NYSE:BHGE) is one of the best stocks on Wall Street today thanks to the company's second-quarter earnings beat. The shares have gained 4.8% today to trade at $25.68, and this has them pushing above a moving average on the charts that has caused issues for the stock in the past.

For instance, the equity has jumped atop the 200-day moving average, which is an important factoid on its own. However, a simple glance at BHGE's chart shows how this trendline has acted as a ceiling in 2019, and the data backs this up. Schaeffer's Senior Quantitative Analyst Rocky White notes that the six previous run-ins with the 200-day have resulted in an average one-month loss of 6.2%.

bhge stock chart

The vast majority of BHGE analysts were already giving the the stock "buy" recommendations coming into today, despite a one-year drop of 25.7%, However, recent options data paints a bearish picture, since the 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at 2.17 and ranks in the top quartile of the annual range. In other words, there's been strong demand for long puts.

Interestingly, one of Baker Hughes' sector peers showed up in White's study, with data calling our attention to Schlumberger Limited (NYSE:SLB) and its 80-day moving average. According to the numbers, SLB shares are now trading near this trendline, and 11 similar meet-ups from recent years have yielded an average one-month loss of 2.5%. Up 1.9% today at $40.32, the security is trading above the moving average, but its long-term momentum is to the downside, as it's down 40% since a year ago.

slb stock 721

Analysts are also bullish on Schlumberger, with 13 of 19 recommending the shares as a "buy" or "strong buy." As for options traders, the stock has seemingly been a profitable target during the past year, in the sense that it's made bigger moves than what speculators were speculating. This is according to SLB's Schaeffer's Volatility Scorecard (SVS) of 97 out of 100.

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