HES is an integrated oil company. With oil now in a bear market, the company's profits will begin to reflect the continuing drop in oil prices. The 20- and 50- day SMA's have both turned lower The 20-day SMA broke below the 50-day SMA on 7/14, and below the 100-day SMA on 7/24. The stock dropped below the 100-day SMA on 7/15. All attempts so far to rally back to the 100-day SMA have failed. The stock has been trading in a narrowing wedge pattern since briefly rallying above the 20-day SMA on 7/30. With the 50-day SMA continuing to decline and on the verge of breaking below the 100-day SMA, and with oil price action continuing to deteriorate, it is likely HES will resolve this wedge by breaking to the downside. First support is in the 88 - 92 range with next support near 80. I would expect to see a test of support near 80, with a possible breakdown to December's lows near 70.
$102.0 (08/14/08)
