2 Reasons to Short This Oil Stock in August

HP just flashed a bearish signal, and tends to struggle in August

Aug 1, 2019 at 11:42 AM
facebook twitter linkedin

Oil-and-gas stock Helmerich & Payne, Inc. (NYSE:HP) is in the red with crude futures today, with oil prices set to snap a five-day winning streak. What's more, the worst may be ahead for HP shares, which just flashed a bearish technical signal and are facing seasonal headwinds, if past is prologue.

Helmerich & Payne stock gapped lower last week, following a quarterly revenue miss. The security subsequently bounced into its 40-day moving average, which has been a bearish signal on several occasions during the past three years. Following the last five signals, HP went on to average a three-week loss of 4.2%, per data from Schaeffer's Senior Quantitative Analyst Rocky White.

Today, the equity is already down 5.4% to trade at $47.02, moving back into the red on a year-to-date basis, and set for its lowest close since Dec. 24 -- the session before HP touched an annual low of $44.56. What's more, even if the stock retakes its 40-day trendline, it has to contend with formidable resistance in the overhead $52 area. This is where HP landed after a May bear gap, and represents a 61.8% Fibonacci retracement of the security's rally from its December lows to its April highs.

HP stock chart aug 1

As alluded to earlier, Helmerich & Payne is also facing seasonal headwinds, if history is any indicator. Over the past 10 years, the equity has ended August higher just twice, averaging a one-month loss of 4.2% -- making it one of the worst stocks to own this month.

Despite the oil-and-gas concern's struggles on and off the charts, analysts remain optimistic. In fact, HP boasts a whopping 10 "buy" or better ratings, compared to four lukewarm "holds" and only one "sell." Not to mention the consensus 12-month price target of $57.11 represents a 21% premium to current levels. A round of analyst downgrades or price-target cuts could exacerbate selling pressure on the shares.


Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 



Special Offers from Schaeffer's Trading Partners