The markets were startled on Friday, as drama in the Middle East sent oil prices and energy stocks higher and the broader market lower. 

But the shares of oil-service giant Schlumberger  (SLB) - Get Report are also a bit lower on Friday. 

In fact, the Energy Select Sector SPDR ETF  (XLE) - Get Report is now lower, too, off 0.6%, although the VanEck Oil Services ETF  (OIH) - Get Report is still up 0.5%. 

Schlumberger's inability to hold its morning gains after a big jump in crude-oil prices should concern the bulls.

This type of price action wouldn’t be surprising if Schlumberger were caught in a nasty downtrend or if sellers had control. But it actually comes as the stock has been quite hot and is very much in the bulls’ control.

Let’s look at the chart to get a better idea of the price action.

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Trading Schlumberger Stock

Daily chart of Schlumberger.

Daily chart of Schlumberger.

Schlumberger stock very clearly bottomed near $30 between August and October. From its October low, the shares have been bubbling higher, rallying more than $10, or more than 33%.

Amid that rally, Schlumberger stock reclaimed all its major moving averages (the 20-day, 50-day, 100-day and 200-day) and burst over $40, a significant level over the past 12 months.

This mark was support until May, when SLB stock broke below it, then served as resistance throughout the third quarter. 

After consolidating below this level in early December, Schlumberger shares finally reclaimed this mark in mid-December and found it as support going into year end.

So what now?

Bulls really want to see Schlumberger stock hold up over $40. It’s also where prior up-trend resistance (blue line) comes into play. Plain and simple, losing this level simply does not bode well for the bull case.

If it does, it immediately puts the 20-day moving average on watch. Below that mark, and up-trend support (blue line) and the 50-day moving average will be the next key area to watch.

Should $40 hold as support, see if SLB stock can take out $41. If it can, the 23.6% retracement at $42.86 is the next upside level to watch.