Oil services stocks faced a downturn in 2024, but signs point towards a potential reversal in SLB stock, the largest player in the industry.
Oil services stocks experienced a bear market cycle in 2024, with the VanEck Oil Services ETF (OIH) losing roughly 12% compared to a 23% gain for the S&P 500. This weakness was mainly driven by a 26% decline in SLB ( SLB ), the largest stock in the oil services industry group, which holds about 20% of the ETF.
SLB has been in a cyclical downtrend since late 2023, returning to support from the monthly cloud (shown by the shaded area on the chart) after surpassing it in 2022 following a bullish secular shift. There are indications of downside exhaustion, according to the DeMARK Indicators, which enhance long-term oversold conditions in the monthly stochastics. This suggests stabilization and a potential reversal of the cyclical downtrend in 2025. Zooming in on SLB's weekly chart reveals counter-trend signals from both the TD Combo and TD Sequential models (denoted by the '13s'), indicating bullish intermediate-term implications. The downtrend has lost momentum, as indicated by the weekly MACD, which reflects notable improvement in momentum and further supports the latest counter-trend signal.An initial upward target for SLB is resistance from the 200-day (~40-week) moving average, around $43.70. The 200-day has been a significant level, repelling multiple relief rallies over the past year, including last month. If SLB clears the 200-day, it would confirm a bullish shift in the stock's primary trend. We believe this is probable, and if a breakout occurs, it would support a larger upmove towards resistance from the weekly cloud model. The cloud is currently near $48.00 but declining over time. SLB and most oil services stocks maintain a positive correlation with the price of WTI crude oil. Considering this, they would benefit from a breakout in WTI crude oil, which is currently in a neutral long-term triangle formation that would resolve higher above $76/bbl. (Our views on crude oil can be followed here.) Counter-trend positions carry inherent risks, so a stop-loss level should be considered for a position in SLB. Support from the December low, near $36.50, exists, but that level might be too distant for some. A tighter level to manage risk could be support from the daily cloud model (not shown), near $39.20
SLB Oil Services Stock Market Technical Analysis Demark Indicators TD Combo TD Sequential Crude Oil WTI
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