HOS Hits the Wall at $25
Wealth Blueprint Letter | May 14, 2015
Hornbeck Offshore Services, Inc. operates offshore supply vessels (OSVs) and multi-purpose support vessels (MPSVs) in the U.S. Gulf of Mexico, Latin America, and internationally. It provides marine transportation, subsea installation, and accommodation support services to exploration and production, oilfield service, offshore construction, and U.S. military customers. The company owns and operates a fleet of U.S.-flagged OSVs and MPSVs that support the deep-well, deepwater, and ultra-deepwater exploration, development, production, construction, installation, inspection, repair, maintenance, well-stimulation, and other enhanced oil recovery activities of the offshore oil and gas industry. It also operates a shore-base support facility located in Port Fourchon, Louisiana, as well as provides vessel management services, such as crewing, daily operational management, and maintenance activities for other vessels owners.
Take a look at the 1-year chart of Hornbeck (NYSE: HOS) below with my added notations:
After peaking last summer, HOS declined for over 6 months, but since December the stock has been trending sideways. During this possible sideways bottoming process, HOS has created a resistance at $25 (green), which is a level that had also been support back in October and December. A break above that $25 level should mean higher prices for the stock.
The Tale of the Tape: HOS has a key level of resistance at $25. A long trade could be entered on a break through that level. However, if you are bearish on the stock, a short trade could be made on any rallies up to $25.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT