Energy stocks, both producers and service companies like Precision Drilling Corp (PD.TO), came under significant pressure yesterday as oil & gas prices retreated. Precision Drilling had rallied up from the red zone of the SIA S&P/TSX Composite Index Report in July to the Favored zone in August but was only able to stay there for a month, as it slid back down into the yellow Neutral Zone yesterday, falling 7 positions to 68th place.
After starting the year off strong, Precision Drilling (PD.TO) has increasingly come under distribution this summer. The first signs of trouble came in June when the shares failed to break through $110.00 and slumped back toward $65.00, breaking an uptrend line and the 50-day average along the way. A summer rebound failed at a lower high near $90.00 signaling the start of a new downtrend, which has accelerated in the last days with the shares snapping an uptrend line and falling below their 50-day average again. Next potential support appears near $70.00, then the February and July lows near $65.00. Initial rebound resistance appears at the 50-day average just above $80.00.
After spiking up but failing to hold above $100.00 earlier this year, Precision Drilling settled into a $75.00 to $90.00 trading range over the summer. Coming off another failed attempt to clear the top of this range, the shares have started to backslide with a Double Bottom breakdown signaling the start of a new downswing.
A break below $75.00 would confirm that distribution has increased, and a new downtrend has started. Should that occur, next potential support may appear at the July low near $65.50 or the $60.00 to $61.50 zone where a bound number, previous column high and a horizontal count cluster. Initial rebound resistance appears near $84.50 based on a 3-box reversal.
With a bearish SMAX score of 3, PD.TO is exhibiting weakness against the asset classes.
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