Oil Services Proxy WFRD Slips—A Sell Signal or Temporary Setback?

With a market capitalization of $5.79 billion, Weatherford International PLC (WFRD) is an American multinational oilfield service company, headquartered in the United States and operating in 75 countries globally, primarily in oil and natural gas-producing regions. As one of the largest players in the oilfield drilling business, WFRD serves as an excellent proxy for our ongoing review of the oil and gas sector, this time with a focus on oil services. This analysis builds upon yesterday's review of Exxon Mobil stock, which is showing mixed technical signals: while the price remains stable, relative strength is deteriorating beneath the surface. Similarly, Weatherford—our selected proxy for the oil services sector—is also trending negatively after being a standout performer for many years. In a somewhat stealthy manner, shares of WFRD have seen their relative strength turn decidedly negative, as illustrated in the attached chart. In late summer, the stock transitioned from the favored zone of the S&P Mid Cap 400 Index Report to the neutral yellow zone, and has now buried itself deep within the unfavored zone. This serves as a clear indicator that it’s time to seek better investment opportunities; a savvy investment advisor would recommend selling in favor of stronger positions that remain high in the favored (green) zone of the report. Turning to the point and figure chart, we have included an overlay of the matrix position, marked with color coding for clarity. This chart reveals that the deterioration of relative strength for WFRD began at the $115 mark, with a relative strength sell signal emerging at the double bottom of $100.22, as shares slipped into the unfavored zone of the report. Following this, shares consolidated in the $90 to $85 range for several months until a recent breakdown triggered a quintuple point and figure sell signal, sending the stock over a cliff with little to no support, potentially plummeting to the $50 to $60 range, highlighted with a green circle. For those considering holding, notable levels to watch are $68.80, $64.83, $55.33, and $51.12. On the upside, shares will likely face significant resistance at the breakdown point of $85.54 and at the psychological level of $100, indicated by the light pink box. This analysis occurs against a backdrop of a 0 SMAX score, which represents SIA's secondary reading of relative strength compared to all other asset classes beyond the stocks included in the S&P Mid Cap 400 Report.

As a secondary vector, we have added a comparison candlestick chart (scaled weekly) of Weatherford shares against the chart of crude oil. Here, we observe that WFRD began to outperform back in October 2022, as it moved above the 50-week moving average. However, this trend has now reversed, and the comparison indicates that WFRD is currently underperforming relative to crude oil as it trades below the 50-week moving average. This is concerning, particularly given the weak crude oil prices, as it suggests that this oil services proxy is in an even weaker position—a combination that is indeed unfavorable for investors.