The initial reaction to Halliburton's (HAL) - Get Reportsecond-quarter results was quite strong. The stock surged 3% in pre-market trading as investors bid up shares. But that bullish action has subsided considerably in the early going and two hours into the session shares are off nearly 4%. HAL is now below last week's low and may be headed lower as overhead pressure grows.
Today's selloff is a sharp reversal from last week's breakout type action. Back on Wednesday the stock appeared headed for a fresh rally leg after taking out a key overhead trend-line with the help of a 3.6% gain. Halliburton has now wiped out that very bullish move and will likely return to the lows as a result. For patient investors a further drift down to the 2017 lows will create a low-risk entry opportunity.
Halliburton is trading just above a major support zone. As the dust settles following today's flush, investors should eye the $42.00 to $40.00 area as a low-risk entry zone. This key area includes the stock's June and July lows near the upper band and the September low at the lower band. On the downside a clear break below $39.00 would indicate more downside may lie ahead. Until the lower band of the support zone is broken, HAL stock bulls should view the current weakness as an opportunity.
This article is commentary by an independent contributor. At the time of publication, the author had a long position in HAL.