Market Vectors Oil Services (
caught my attention this past weekend as a number of the stocks
in the oil services sector appeared on my bearish scans. Rather
than cover the companies individually, I decided to look at the
OIH itself to see what could be gleaned from the charts.
The weekly chart presented several interesting developments.
was the first thing that caught my attention. It recently went
over the 80 level for the first time since February 2011. That
instance came just ahead of a major selloff in the
that saw the price lose over 44% in just over six months. The
second item of note that caught my eye was how far ahead of its
52-week moving average the ETF had moved. Over the last year and
a half, anytime the ETF has gotten too far ahead of its 52-week
moving average, the price has fallen and brought the fund back
down to the moving average.
Looking at the monthly chart, we see that the OIH stock has a
way to go before it reaches its all-time high of $70.48. That
high was reached during the oil spike in 2008 that took the price
of oil up to $147 a barrel. Looking at the monthly oscillators we
see that the OIH is the most oversold it has been in several
years. The slow stochastic readings look to be ready for a
bearish crossover like the one that occurred in 2011- the
aforementioned time period where the fund lost 44% in six
Rather than look at just the sentiment of the OIH itself, I
decided to look at the sentiment of the top holding as well. For
the OIH itself, the
is at its highest reading for the past year which suggests
pessimism and the short interest ratio is at 6.30 which also
suggest pessimism toward the fund. However, the short interest
itself has fallen from 19.6 million to 12.6 million since the
beginning of February. Even though the short interest has fallen,
the ratio has risen due to the average volume declining
The top three holdings in the OIH are
National Oilwell Varco (
. Collectively these three companies represent 41.1% of the
holdings in the OIH. Rather than layout the pertinent sentiment
readings of these three
individually, I thought a table might be easier.
The average short interest ratio is 3.3 while there are a
total of 81 "buy" ratings, 18 "hold" ratings and only two "sell"
ratings. The average overall sentiment composite rating is 8.37.
These readings are quite a contrast to the readings on the
Given the overall optimism toward the holdings and the
overbought levels of OIH stock, I would look to short the fund. I
see at least a 15% decline over the next few months and it could
get even worse if it plays out like it did in 2011.
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