Big Dog's Gotta Eat

Today's marked strength in the OIH, ETF for oil services and equipment stocks, reinforces our consistent attention to that group for a while now, both here and with Members. Even as oil itself is continuing to search for firm footing, when the OIH names act this well it can often be a bullish hint as business ramps up. As I write this, the OIH is higher by about 3.85%. After all, you cannot do much in the oil business without equipment and various onshore and offshore services. 

That said, Schlumberger, founded in Paris, France, but headquartered in Houston, Texas, remains the largest firm by market cap in the OIH. Doing business as SLB these days, the big dog's still gotta eat, so to speak, if this OIH rally will hold up and sustain itself. 

On the zoomed-out SLB daily chart, below, this is an excellent case study in how price reacts to the declining 200-day moving average (yellow line, arrows) in a powerful bear trend. For roughly the last eighteen months that has been the case with SLB, which is a big reason why I have not done much trading in OIH names, or many oil names at all for that matter. 

However, for about five weeks SLB has been basing at the 200-day in lieu of being violently rejected like the previous instances, all the while its peers in the OIH have noticeably improved. A breakout higher from here, above $38 which holds, serves as strong evidence that the trend is changing in favor of the bulls.

And given the size of SLB it adds gravitas to the recent strength in the OIH.