2023-03-09 01:08:36 ET
Summary
- Schlumberger is consistently generating high revenue for several years and has good potential for investment with high returns.
- The appearance of an inverted head and shoulders pattern and bullish signals point to much higher prices.
- The emergence of a symmetrical triangle is the decision point for short-term investing action.
Schlumberger Limited ( SLB ) is a multinational oil and gas services company that offers technology and solutions to the upstream energy sector. Schlumberger's services include drilling, generation process, manufacturing, and reservoir management. Schlumberger has a solid reputation for innovation, technology, and industry expertise, and investors seeking exposure to the oil and gas industry should consider investing in the company. Schlumberger's investments in cutting-edge technology and services for the oil and gas industry are significant for enhancing the industry's efficiency.
Schlumberger is consistently generating high revenue over the past years. The total revenue for 2022 is $28.09 billion, which is significantly higher than the $22.93 billion earned in 2021. The company's revenue was mostly distributed over the last two quarters of 2022, with the third and fourth quarters of 2022 generating $7.48 billion and $7.88 billion in revenue, respectively. The company's high revenue is rewarded due to its global market presence, reputation for technological innovation , and variety of services. Schlumberger's high revenue results in high earnings, which boosts investor confidence and increases stock demand. This article provides a technical evaluation of SLB stock price and an outlook based on price action analysis. The stock price is found to be in an uptrend. The breakout from the inverted head-and-shoulders pattern was bullish, whereas the next move from the symmetrical triangle will determine the stock's short-term direction. When the symmetrical triangle is broken, investors can profit from the bullish price action by entering the market during the next dip.
Technical Evaluation for Schlumberger
The Long-term outlook
The chart below portrays the monthly price outlook for Schlumberger, which is highly volatile and characterized by wide ranges. On the long-term chart, there is no particular pattern, but the $11-$13 support level is visible. This basic support has served as the magnet for price increases in the past. Each time the price reaches the $13 region, it increases with a big ratio. Therefore, investors look to buy the stock at this price level. Currently, the stock price of Schlumberger is bouncing from the March 2020 lows of $11.22. The price has gained more than 450% from the March 2020 lows to the January 2023 highs. This dramatic increase in the price of Schlumberger is due to heavy volatility from current economic instability. Currently, the price is hitting resistance at the red trendline at $62.48 and going down. However, the price is expected to go up after the correction.
Since the price of Schlumberger has been extremely volatile, the quarterly logarithmic chart depicts the long-term outlook with more clarity. The quarterly chart clearly indicates that the Schlumberger stock price is in a bullish mode. From 1982 to 2014, the price follows a rising red channel. The channel was broken in 2017 and the price retraced to the long-term support region between $11 and $13. The majority of this decline occurred throughout the Covid-19 crisis. According to the chart below, the significant decline in stock price during Covid-19 was quite typical. The blue support line resulted in a strong rebound, and the price is rising continuously. The fourth quarter of 2022 was marked by a strong bullish candle, and there are no signs of a reversal. After some price consolidations, the Schlumberger stock price is anticipated to rise.
The Present Situation
The weekly chart below illustrates the price structure of the most recent rebound from March 2020. It is observed that the bottom was formed using double-bottom price action, with the lows of October 2020 marking the second bottom of this move at $13.13. After forming a double bottom, the price increased to form an inverted head and shoulders pattern. The inverted head and shoulders pattern is a bullish chart pattern that indicates a reversal of the downtrend. The appearance of this pattern on the Schlumberger chart indicates that the downtrend has weakened and buyers are regaining control. The pattern is confirmed when the price breaks above the neckline in January 2022. The neckline is a level of resistance formed by connecting the shoulders' high points. This breakout indicates a shift from bearish to bullish sentiment, and traders enter long positions in anticipation of additional upside momentum. As depicted in the chart below, the price retraces to the neckline support, which was a strong buy signal for SLB stock. Following the buy signal, the price increased and breached the second red trend line.
According to the chart below, the price is currently exhibiting a strong bullish trend, and the strong support at the red trendline indicates further gains for the stock. There is still no sign of a reversal in the stock, and it is anticipated that the price will rise substantially from this region. The strong short-term support level of $52 serves as the starting point for long trades in anticipation of price increases. The red trend lines at $46 and $30 provide strong support for buying the stock.
Due to the recent period of consolidation in the Schlumberger market, a symmetrical triangle chart pattern has emerged, with the highs and lows converging to form a triangle shape. The emergence of a symmetrical triangle is depicted on the daily chart below. Usually, this pattern develops when the market is uncertain and buyers and sellers are in equilibrium. A break below $52 will result in the breakdown of the symmetrical triangle. In contrast, a break above $58 would break the symmetrical triangle upwards. If the triangle is broken to the upside, the price will surge with great momentum. Alternatively, if the triangle breaks downward, investors will have an excellent buying opportunity in the strong support regions of $47 and $30.
Market Risk
Before making any investment decision, it is essential to thoroughly weigh the risks and potential returns. The oil and gas industry is vulnerable to numerous factors, including commodity price fluctuations, regulatory changes, and geopolitical events. These elements have an effect on Schlumberger's financial performance. Additionally, Schlumberger's market position and growth prospects are impacted by competition from alternative energy sources and other oilfield services companies. Due to substantial fluctuations in oil prices, the stock price of Schlumberger is highly volatile. Oil prices have a significant impact on Schlumberger's revenue. As oil prices rise, demand for Schlumberger's services increases, resulting in an increase in the stock price. Alternatively, if oil prices fall, demand for Schlumberger's services decreases, resulting in a decrease in the stock price. Schlumberger generated only $23.60 billion in revenue in 2020 due to lower oil prices. The break below $46 and $30 will increase the downside risk in the market.
Conclusion
In conclusion, investing in Schlumberger is a lucrative opportunity for investors seeking exposure to the oil and gas industry. The company's leading position, global reach, and strong financials provide a solid foundation for growth and profitability. The appearance of an inverted head and shoulder pattern is extremely bullish and indicates higher prices. There is no evidence of a price reversal from the recent uptrend. However, the symmetrical triangle is the point of decision for immediate actions. The triangle will be broken to the upside and the next rally will commence upon a break above $58. Alternatively, a breach below $52 would indicate further downside. The strong buying range for Schlumberger stock is between $46 and $30. Based on the above discussion, Schlumberger is a valuable addition to a well-diversified investment portfolio, and the bullish market structure is presenting an attractive investment opportunity.
For further details see:
Schlumberger: Buy The Next Market Dip (Technical Analysis)