Equity markets ended the session in green territory yesterday as investors focused on better-than-expected earnings from IBM instead of worrisome data on the home front. Weekly jobless claims came in at 386,000 versus the expected 352,000, while existing home sales also disappointed as the figure in at 4.37 million versus the expected 4.55 million. Amidst the mildly-bullish sentiment on Wall Street, crude oil futures took off; prices for the fossil fuel soared close to 3% on the day, settling just above $92.50 a barrel as the closing bell rang [see also How To Play Schiff's $5,000 Gold Prediction].
Oil industry behemoth Schlumberger (SLB) is slated to report quarterly earnings later today before the opening bell on Wall Street. As such, our ETF to watch for the day is the Van Eck Market Vectors Oil Services ETF (OIH), which has Schlumberger as its top holding, allocating close to 21% of its total assets to this well-known oil services company. This earnings release should offer valuable insights into the health of the energy market as a whole given the firm’s extensive reach at home as well in foreign markets [see also Energy Bull ETFdb Portfolio].
After posting better-than-expected results in the first quarter of 2012, analysts are expecting for the world’s largest oilfield services provider to follow up with another monstrous quarter this time around. Experts point to several factors that should bolster the firm’s revenues, including a rebound in natural gas and crude oil prices as well as increased global drilling activity. This round of earnings will be highly anticipated as Schlumberger has gotten a foothold in China while also increasing its rig count by an estimated 10% thanks to strong growth in exploration and deepwater drilling operations. Analysts are expecting for the company to rake in revenues of $10.4 billion along with earnings of $1 per share [see also 3 ETFs For Long-Term Energy Trends].
OIH has been steadily declining in price since recently peaking at $45.14 a share on 2/24/2012. This ETF appears to have rebounded however, as shares are holding above the $34 level having bottomed out at $32.54 a share on 6/26/2012. If today’s earnings beat expectations, OIH may be in for a rally; in terms of upside, the next level of resistanc ecomes in at around $40 a share. On the other hand, if selling pressures take over, OIH could very well retest support at $36 a share, while major support comes in at the $34 level. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit-taking techniques.
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Disclosure: No positions at time of writing.