Services To The Rescue?
As the PRICE of oil rises, is it better to play the service names as opposed to the exploration and production plays? If one favors the former they would most likely make the analogy of the “Wild West” gold rush, when it made more sense to supply picks and axes to euphoric “miners”, than in the resource itself. When the price of oil advances, many firms will turn on the spigots in an attempt to extract as much as they can, which would in theory push the value of crude lower as more supply takes hold. This is where services will come into play to facilitate. Or is the economy on the improve and a real demand is just around the corner? The ratio chart below recommends overweighting names in the OIH as opposed to the XOP. But this is on a very general basis. As always there will be leaders within both sub groups, and play each accordingly. WHD could offer some good risk/reward as it trades above the very round 20 number, and is now for the second time at an upside gap fill. Above the 200 day could really start “gushing” higher.